MarketsMOJO downgrades Ruchira Papers to 'Sell' due to poor growth and underperformance

Ruchira Papers, a microcap company in the paper and paper products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 1, 2024. This decision was based on the company's poor long-term growth, negative financial results for the past three quarters, and underperformance in the market.
According to MarketsMOJO, Ruchira Papers has shown a slow growth rate in net sales and operating profit over the last five years, with an annual growth rate of 5.89% and 8.59%, respectively. In addition, the company's results for the last three quarters have been negative, with a significant decrease in PBT LESS OI(Q) at Rs 12.03 crore, PAT(Q) at Rs 9.64 crore, and NET SALES(Q) at Rs 160.02 crore.

The stock has also underperformed in the market, generating a return of only 22.70% in the last year, compared to the market's return of 37.64% (BSE 500). However, Ruchira Papers does have a strong ability to service debt, with a low Debt to EBITDA ratio of 1.20 times.

The technical trend for the stock is currently sideways, indicating no clear price momentum. It has also shown a deterioration from Mildly Bullish on July 1, 2024, with a return of only 0.62% since then. On the positive side, Ruchira Papers has a very attractive valuation with a ROCE of 14.6 and an enterprise value to capital employed ratio of 1.

Despite the stock's low valuation, it is currently trading at a discount compared to its historical average. In the past year, while the stock has generated a return of 22.70%, its profits have fallen by 27.2%. Additionally, the company has a high dividend yield of 3.6% at its current price.

It is worth noting that the majority shareholders of Ruchira Papers are the promoters themselves. This may indicate a lack of interest from external investors and experts in the company. Overall, with its recent downgrade to 'Sell' and various concerning factors, investors may want to approach Ruchira Papers with caution.