MarketsMOJO Downgrades Zeal Aqua to 'Sell'

Zeal Aqua, a microcap company in the aquaculture industry, has recently received a 'Sell' rating from MarketsMOJO on October 23, 2023. This downgrade is based on several factors that indicate weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's average Return on Capital Employed (ROCE) of 5.42%, which is considered weak. Additionally, Zeal Aqua has shown poor long-term growth with an annual growth rate of 17.79% in Net Sales and 11.63% in Operating profit over the last 5 years. This is further compounded by the company's high Debt to EBITDA ratio of 6.95 times, indicating a low ability to service debt.

In the recent quarter, Zeal Aqua's performance has been flat with a decrease in Profit Before Tax (PBT) and a slight increase in Net Sales. This trend is also reflected in the company's long-term performance, where it has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months.

From a technical standpoint, the stock is currently in a Mildly Bullish range and has shown a slight improvement since December 2023. However, the stock is still trading at a discount compared to its historical valuations, with an attractive Enterprise value to Capital Employed ratio of 1.1. Additionally, while the stock has generated a negative return of -4.52% in the last year, its profits have increased by 69.3%, resulting in a low PEG ratio of 0.2.

It is worth noting that the majority shareholders of Zeal Aqua are the promoters of the company. This information may be important for investors to consider when evaluating the company's performance and future prospects.

In conclusion, Zeal Aqua's recent 'Sell' rating from MarketsMOJO is based on its weak long-term fundamental strength and underperformance in the market. While there have been some technical improvements, the company's financials and performance indicators suggest caution for potential investors.