MarketsMOJO Downgrades Bal Pharma to 'Sell' Due to Weak Fundamentals and High Debt

Bal Pharma, a microcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 27, 2024. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 6.79%, poor long-term growth with net sales and operating profit only growing at an annual rate of 9.85% and 8.41%, respectively, over the last 5 years, and a high debt to EBITDA ratio of 8.50 times, indicating a low ability to service debt.
In addition, the company's recent results for the quarter ending September 24 showed flat net sales at Rs 73.69 crore. However, there are some bullish factors for the stock, such as being in a mildly bullish range and having multiple technical indicators, including MACD, Bollinger Band, and KST, in its favor.

Despite these positive indicators, Bal Pharma's stock is currently trading at a discount compared to its average historical valuations. Its ROCE of 10.8 also suggests an attractive valuation with a 1.7 Enterprise value to Capital Employed. Furthermore, over the past year, the stock has generated a return of 21.63%, while its profits have risen by 139.4%, resulting in a PEG ratio of 0.2.

It is worth noting that the majority shareholders of Bal Pharma are its promoters, which may have influenced the company's recent downgrade to a 'Sell'. Investors should carefully consider these factors before making any decisions regarding Bal Pharma's stock.