MarketsMOJO downgrades JSW Steel to 'Sell' due to high debt and negative financial results

JSW Steel, a largecap company in the steel/sponge iron/pig iron industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 12, 2024. This decision was based on the company's high Debt to EBITDA ratio of 2.73 times, indicating a low ability to service debt. This is further supported by the company's negative results for the last three consecutive quarters, with a -1.48% fall in Operating Profit in September 2024.
In addition, the company's Operating Cash Flow has been at its lowest at Rs 12,078.00 Cr, and its Operating Profit to Interest ratio is also at its lowest at 2.55 times. The company's Profit After Tax has also fallen by -64.7% in the last quarter, at Rs 614.12 cr. These factors contribute to the 'Sell' rating given by MarketsMOJO.

On a technical level, the stock is currently in a Mildly Bullish range, with its MACD and KST technical factors also showing a Bullish trend. However, with a ROCE of 9.4, the stock is fairly valued with a 1.9 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations.

Despite generating a return of 26.35% in the past year, the company's profits have fallen by -41.9%. This could be a cause for concern for investors. However, the company has a high Institutional Holdings at 36.7%, indicating that these investors have better capability and resources to analyze the company's fundamentals.

With a market cap of Rs 2,39,789 cr, JSW Steel is the biggest company in the sector, constituting 23.83% of the entire industry. Its annual sales of Rs 170,836.00 are also significant, making up 22.23% of the industry. These factors make JSW Steel a key player in the steel/sponge iron/pig iron industry.