MarketsMOJO Downgrades Dhanalaxmi Roto Spinners to 'Sell' Due to Weak Financials and High PEG Ratio

Dhanalaxmi Roto Spinners, a microcap textile company, has recently received a 'Sell' rating from MarketsMOJO on November 8th, 2024. This downgrade is based on the company's weak long-term fundamental strength, with a 13.24% CAGR growth in net sales over the last 5 years. In addition, the company's recent financial results for September 2024 have shown negative growth, with a -51.84% increase in PAT (HY) and a low PBDIT (Q) of Rs 0.11 crore. The operating profit to net sales (Q) ratio is also at its lowest at 0.24%.
Other factors contributing to the 'Sell' rating include the stock being in a mildly bullish range and its MACD and KST technical factors being bullish. The company's ROE of 19.6 indicates a fair valuation with a price to book value of 1.7. However, the stock is currently trading at a premium compared to its average historical valuations. Additionally, while the stock has generated a return of 86.56% in the past year, its profits have only risen by 1.3%, resulting in a high PEG ratio of 6.7.

The majority shareholders of Dhanalaxmi Roto Spinners are non-institutional investors. Despite its market-beating performance in the long term and near term, with a return of 86.56% in the past year and outperforming BSE 500 in the last 3 years, 1 year, and 3 months, the company's weak financials and high PEG ratio have led to the 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions regarding Dhanalaxmi Roto Spinners.