MarketsMOJO downgrades Manomay Tex India to 'Sell' due to high debt and weak fundamentals

Manomay Tex India, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on August 28, 2024. This downgrade is based on several factors, including the company's high debt and weak long-term fundamental strength.
Over the past 5 years, Manomay Tex India has only seen a modest growth in net sales at an annual rate of 9.10% and operating profit at 16.51%. Additionally, the company has a high debt to equity ratio of 1.61 times, indicating a heavy reliance on debt for financing.

Furthermore, with a ROCE of 8.3, the stock is currently overvalued with an enterprise value to capital employed ratio of 1.9. This is also reflected in the stock's current trading price, which is higher than its average historical valuations.

In the past year, while the stock has generated a return of 116.83%, its profits have remained stagnant, resulting in a high PEG ratio of 32.4.

On a positive note, Manomay Tex India has consistently shown strong operating profit to interest ratio, PBDIT, and PAT, indicating efficient management of its operations. The stock is also technically in a mildly bullish range, with multiple factors such as MACD, KST, DOW, and OBV showing a bullish trend.

The majority shareholders of Manomay Tex India are its promoters, who have consistently delivered returns over the last 3 years. In fact, the stock has outperformed BSE 500 in each of the last 3 annual periods, making it a promising investment for the long term.

However, considering the current financial state and valuation of the company, MarketsMOJO has downgraded its stock call on Manomay Tex India to 'Sell'. Investors are advised to carefully evaluate their investment decisions and consider the risks associated with the company before making any investment.