MarketsMOJO Downgrades Hardcastle & Waud Mfg Co to 'Sell' Amidst Weak Fundamentals and Potential Overvaluation

Hardcastle & Waud Mfg Co, a microcap company in the paints industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 2, 2024. This decision was based on several factors, including the company's weak long-term fundamental strength with a -1.04% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of 0.85, and a low profitability per unit of shareholders funds with a Return on Equity (avg) of 1.75%.
Furthermore, the stock is currently trading at a premium compared to its average historical valuations, with a price to book value of 1.3 and a PEG ratio of 0.2. While the stock has generated a return of 114.28% in the past year, its profits have only risen by 135.5%, indicating a potential overvaluation.

On a positive note, the company has declared positive results for the last 3 consecutive quarters, with a ROCE (HY) of 6.79% and a higher PAT (9M) of Rs 2.01 Cr. The stock is also technically in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend.

It is worth noting that the majority shareholders of Hardcastle & Waud Mfg Co are the promoters, and the company has consistently generated returns over the last 3 years. In fact, the stock has outperformed BSE 500 in each of the last 3 annual periods, further highlighting its potential for growth.

In conclusion, while Hardcastle & Waud Mfg Co may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO suggests caution for potential investors. It is important to carefully consider all factors before making any investment decisions.