MarketsMOJO Downgrades Mahindra Logistics Due to Poor Long-Term Growth

Mahindra Logistics, a smallcap company in the logistics industry, has recently received a 'Sell' rating from MarketsMOJO on September 10, 2024. This downgrade is based on poor long-term growth, with the company's operating profit declining at an annual rate of -6.81% over the last 5 years.

In its latest quarter results, Mahindra Logistics reported flat numbers with a decrease in profit before tax and other income by -45.63% and a decrease in dividend payout ratio to -32.90%. Additionally, the company's interest expenses were at a high of Rs 19.49 crore.

The stock has also underperformed the market in the last 1 year, generating a return of only 14.97% compared to the market's return of 34.61% (BSE 500).

On the positive side, Mahindra Logistics has a strong ability to service its debt with a low Debt to EBITDA ratio of 0.80 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. Since the downgrade on September 10, 2024, the stock has only generated a return of 2.58%.

With a ROCE of 4.7, the stock is currently fairly valued with an Enterprise value to Capital Employed ratio of 4.8. It is also trading at a discount compared to its average historical valuations. However, despite a return of 14.97% in the last 1 year, the company's profits have fallen by -1509.3%.

It is worth noting that Mahindra Logistics has a high institutional holding of 23.01%, indicating that these investors have better resources and capabilities to analyze the fundamentals of the company compared to retail investors.

In conclusion, based on the recent downgrade and poor long-term growth, MarketsMOJO has given a 'Sell' rating for Mahindra Logistics. However, the company's strong ability to service debt and fair valuation may be attractive to some investors.