MarketsMOJO Downgrades Axel Polymers to 'Sell' Due to High Debt and Weak Fundamentals

Axel Polymers, a microcap company in the plastic products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 20, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength.
With a debt to equity ratio of 3.14 times, Axel Polymers is considered a high debt company. This means that the company may struggle to meet its financial obligations in the long run. Additionally, the company's return on equity has been low at 8.83%, indicating a low profitability per unit of shareholders' funds.

From a technical standpoint, the stock is currently in a mildly bearish range. The technical trend has deteriorated since September 20, 2024, and the stock has only generated a return of 4.52% since then. The Bollinger Band and KST technical factors also suggest a bearish outlook for the stock.

However, there are some positive aspects to consider. Axel Polymers has declared positive results for the last 14 consecutive quarters. Its inventory turnover ratio (HY) is at a high of 3.35 times, and its debtors turnover ratio (HY) is at a high of 12.14 times. The company's net sales for the quarter were also at a high of Rs 42.24 crore.

In terms of valuation, Axel Polymers has an attractive ROCE of 12.9 and a 2 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. However, it is important to note that while the stock has generated a return of 33.11% over the past year, its profits have fallen by -63.2%.

It is also worth mentioning that the majority shareholders of Axel Polymers are its promoters. This means that they have a significant stake in the company and may have a strong influence on its decisions.

In conclusion, while Axel Polymers may have some positive aspects, the high debt and weak long-term fundamental strength make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any decisions regarding this microcap company.