MarketsMOJO downgrades Mishtann Foods to 'Sell' due to high debt and declining sales

Mishtann Foods, a smallcap FMCG company, has recently been downgraded to a 'Sell' by MarketsMOJO on July 22, 2024. This decision was based on several factors, including the company's high Debt to EBITDA ratio of 3.88 times, indicating a low ability to service debt. In addition, the company's operating cash flow for the year ending June 2024 was at its lowest at Rs -53.83 crore, and its net sales for the last 9 months have decreased by -31.23%. The company's profits for the quarter ending June 2024 have also fallen by -17.0%.
Technically, the stock is currently in a Mildly Bearish range, with the technical trend deteriorating from Mildly Bullish on July 22, 2024. This has resulted in a -1.63% return since then. Multiple indicators, such as MACD, Bollinger Band, and KST, also suggest a bearish outlook for the stock.

In the past year, Mishtann Foods has underperformed the market, generating a return of 22.78% compared to the market's (BSE 500) return of 35.14%. However, the company has shown healthy long-term growth, with its operating profit growing at an annual rate of 48.34%. It also has a very attractive valuation with a ROE of 62.8 and a price to book value of 3.3, trading at a discount compared to its historical valuations. Additionally, while the stock has generated a return of 22.78% in the past year, its profits have risen by 593%, resulting in a PEG ratio of 0.

Institutional investors have also shown an increasing interest in Mishtann Foods, with their stake in the company increasing by 2.79% over the previous quarter. They currently hold 5.02% of the company, indicating their confidence in its fundamentals. Overall, while the stock may have underperformed in the past year, it has shown potential for long-term growth and has attracted the attention of institutional investors.