MarketsMOJO Downgrades IKIO Lighting to 'Sell' Due to Poor Growth and Expensive Valuation

IKIO Lighting, a smallcap company in the consumer electronics industry, has recently been downgraded to a 'Sell' by MarketsMOJO on June 26, 2024. This decision was based on the company's poor long-term growth, negative results in the previous quarter, and expensive valuation.
According to MarketsMOJO, IKIO Lighting's operating profit has only grown at an annual rate of 12.58% over the last 5 years, indicating a lack of significant growth potential. In addition, the company declared negative results in March 2024, after showing positive results in December 2023. This decline was reflected in its PAT (Q) which fell by -41.3% to Rs 9.52 crore, and its operating profit to interest (Q) which was at its lowest at 6.91 times. The company's net sales (Q) also saw a significant decrease to Rs 94.79 crore.

Furthermore, IKIO Lighting's valuation is considered to be very expensive with a price to book value of 4.2, which is higher than its average historical valuations. This is also reflected in its ROE of 11, which is considered to be high. However, the stock has underperformed the market (BSE 500) in the last year, generating negative returns of -34.62% while the market has seen a return of 38.95%.

Institutional investors have also decreased their stake in the company by -2.1% in the previous quarter, holding only 9.26% collectively. This indicates a lack of confidence in the company's fundamentals. On the other hand, IKIO Lighting has shown high management efficiency with a ROE of 23.08% and a strong ability to service debt with a low debt to EBITDA ratio of 0.77 times.

The technical trend for IKIO Lighting is currently sideways, indicating no clear price momentum. The stock has also underperformed since June 24, 2024, generating negative returns of -4.62%. Overall, MarketsMOJO's downgrade of IKIO Lighting to 'Sell' is based on the company's poor financial performance and expensive valuation, making it a risky investment option.