MarketsMOJO Downgrades Mawana Sugars to 'Sell' Due to Weak Financials and High Debt

Mawana Sugars, a microcap company in the sugar industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 30, 2024. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
Over the last 5 years, the company has seen a -7.52% CAGR growth in operating profits, indicating a decline in its financial performance. Additionally, Mawana Sugars has a high debt to EBITDA ratio of 4.04 times, which raises concerns about its ability to repay its debts. The company's return on equity (avg) is also low at 4.23%, further highlighting its lack of profitability.

In the past year, the stock has underperformed the market, generating a return of only 16.34% compared to the market's 37.71%. However, there have been some positive results for the company in March 2024, with PBT LESS OI(Q) growing at 755.7% and PAT(Q) growing at 336.8%. The PBDIT(Q) has also reached its highest at Rs 81.40 cr.

Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. With a ROCE of 5.8, the stock is fairly valued, with an enterprise value to capital employed ratio of 1.1. It is also currently trading at a discount compared to its average historical valuations.

It is worth noting that while the stock has generated a return of 16.34% in the past year, its profits have risen by 162.4%, resulting in a low PEG ratio of 0.1. The majority shareholders of Mawana Sugars are the promoters, indicating their confidence in the company's future prospects.

In conclusion, while Mawana Sugars may have some positive developments in its financials, the overall weak fundamental strength and low profitability make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.