MarketsMOJO Downgrades Snowman Logistics to 'Sell' Due to Weak Debt Servicing Ability

Snowman Logistics, a smallcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 1, 2024. This decision was based on the company's weak ability to service its debt, with a poor EBIT to Interest (avg) ratio of 1.16. Additionally, the company has a low Return on Equity (avg) of 1.16%, indicating low profitability per unit of shareholders' funds.
The company also reported negative results in June 2024, with a PAT (HY) of Rs 3.94 crore, which has decreased by -53.54%. The operating profit to interest (Q) ratio was also at its lowest at 3.92 times, while PBDIT (Q) was at its lowest at Rs 23.44 crore.

However, there are some positive factors to consider. The company has shown healthy long-term growth, with an annual growth rate of 52.09% in operating profit. The stock is also technically in a mildly bullish range, with the MACD and KST technical factors also being bullish.

Snowman Logistics has a fair valuation with a ROCE of 6.5 and an enterprise value to capital employed ratio of 2.5. However, the stock is currently trading at a premium compared to its average historical valuations. In the past year, the stock has generated a return of 62.76%, but its profits have fallen by -25.3%.

One positive sign is the rising confidence of promoters in the company. They have increased their stake by 1.19% in the previous quarter and currently hold 46.43% of the company. This shows their high confidence in the future of the business.

In the long term, Snowman Logistics has outperformed the BSE 500 index, with a return of 62.76% in the last year and outperforming in the last 3 years, 1 year, and 3 months. However, with the recent downgrade by MarketsMOJO, investors may want to carefully consider their options before investing in this smallcap logistics company.