MarketsMOJO Downgrades Jainex Aamcol to 'Sell' Due to Weak Fundamentals and High Valuation

Jainex Aamcol, a microcap engineering company, has recently been downgraded to a 'Sell' by MarketsMOJO on August 30, 2024. This decision was based on the company's weak long-term fundamental strength, with a 14.66% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.36.
The company's recent financial results for June 2024 have also been flat, with its ROCE (HY) at its lowest at 10.71% and its DEBTORS TURNOVER RATIO (HY) also at its lowest at 3.73 times. Furthermore, with a ROCE of 10.5, the company's valuation is considered expensive with a 3.8 Enterprise value to Capital Employed. However, the stock is currently trading at a discount compared to its average historical valuations.

In the past year, the stock has generated a return of 54.10%, but its profits have only risen by 10%, resulting in a PEG ratio of 3.1. Other factors to consider for this stock include its technical trend, which has improved from Mildly Bullish on August 28, 2024, and has generated a return of 43.98% since then. Multiple technical indicators, such as MACD, Bollinger Band, KST, DOW, and OBV, also suggest a bullish trend for the stock.

The majority shareholders of Jainex Aamcol are the promoters, and the company has consistently outperformed BSE 500 in each of the last 3 annual periods, along with generating a return of 54.10% in the last 1 year. However, with the recent downgrade to 'Sell' by MarketsMOJO, investors may want to carefully consider their investment in this microcap engineering company.