MarketsMOJO Downgrades Vivid Global Industries to 'Sell' Rating Due to Weak Performance and Valuation

Vivid Global Industries, a microcap company in the chemicals industry, has recently received a 'Sell' rating from MarketsMOJO on September 20, 2024. This downgrade is based on several factors that indicate a weak performance and valuation for the company.
One of the main reasons for the 'Sell' rating is the company's weak long-term fundamental strength. Over the past 5 years, Vivid Global Industries has seen a -158.54% CAGR growth in operating profits, which is a significant decline. Additionally, the company's ability to service its debt is also weak, with a poor EBIT to Interest (avg) ratio of 1.43.

Moreover, the company's valuation is considered to be very expensive with a price to book value of 1.3 and a ROE of 3.8. This indicates that the stock is trading at a premium compared to its historical valuations. In the past year, while the stock has generated a return of -4.72%, its profits have actually increased by 88%, resulting in a PEG ratio of 0.1.

Furthermore, Vivid Global Industries has consistently underperformed against the benchmark over the last 3 years. Despite generating a negative return of -4.72% in the last year, the stock has also underperformed the BSE 500 in each of the last 3 annual periods.

On a positive note, the company did report higher profits in June 2024, with a PAT (HY) of Rs 0.15 crore and the highest net sales (Q) of Rs 13.19 crore. However, these results may not be enough to offset the overall weak performance of the company.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. However, this may not be enough to outweigh the fundamental weaknesses of the company.

It is also worth noting that the majority of shareholders in Vivid Global Industries are non-institutional investors, which may indicate a lack of confidence in the company's future prospects.

In conclusion, based on the current information and performance of Vivid Global Industries, it is recommended to approach the stock with caution and consider the 'Sell' rating given by MarketsMOJO. Investors should carefully evaluate all factors before making any investment decisions.