MarketsMOJO Downgrades Solid Stone Company to 'Sell' Rating Due to Weak Fundamentals

Solid Stone Company, a microcap company in the ceramics and allied industry, has recently received a 'Sell' rating from MarketsMOJO on May 13, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's low ability to service debt, with a high Debt to EBITDA ratio of 6.74 times. This means that the company may struggle to pay off its debts in the future, which could negatively impact its financial stability.

In addition, Solid Stone Company has shown a -7.09% CAGR growth in net sales over the last 5 years, indicating a lack of growth and potential for future profitability. The company's Return on Equity (avg) of 1.86% also suggests low profitability per unit of shareholders' funds.

Furthermore, the company's recent financial results for December 2023 have been flat, with a -30.95% growth in net sales and the lowest cash and cash equivalents at Rs 0.03 cr. The PBDIT(Q) is also at its lowest at Rs 0.89 cr, further highlighting the company's financial struggles.

On a positive note, the stock is currently in a mildly bullish range and the MACD has been bullish since May 13, 2024. However, these technical factors may not be enough to outweigh the weak fundamental strength of the company.

In terms of valuation, Solid Stone Company has a very attractive ROCE of 8.9 and is trading at a discount compared to its average historical valuations. However, the PEG ratio of the company is 0.2, indicating that the stock may be overvalued.

It is also worth noting that the majority shareholders of Solid Stone Company are the promoters, which may raise concerns about potential conflicts of interest.

Overall, the recent 'Sell' rating on Solid Stone Company by MarketsMOJO is a reflection of the company's weak long-term fundamental strength and financial struggles. Investors should carefully consider these factors before making any investment decisions.