Marsons downgraded to 'Sell' by MarketsMOJO due to high debt and weak long-term growth.

Marsons, a smallcap company in the electric equipment industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 14, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the past 5 years, Marsons has only seen a 33.69% growth in net sales and a -0.61% operating profit, indicating poor long-term growth.
One of the main concerns for Marsons is its high debt-to-equity ratio, which stands at 11.94 times. This means that the company has a significant amount of debt compared to its equity, which can be a cause for concern for investors. Additionally, the company's return on capital employed is only 0.48%, showing low profitability per unit of total capital.

Furthermore, Marsons has a very expensive valuation with a price-to-book value of 41.5, which is much higher than its historical average. However, the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has seen a significant return of 3690.75%, but its profits have only risen by 227%, resulting in a PEG ratio of 2.4.

Another factor to consider is that despite its size, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business itself.

On a positive note, Marsons has shown very positive results in its latest quarter, with a growth in net sales of 2039.44%. The company has also declared positive results for the last two consecutive quarters, with a higher net sales of Rs 68.39 crore and a debtors turnover ratio of 1.19 times.

From a technical standpoint, the stock is currently in a mildly bullish range, with both its MACD and KST technical factors showing a bullish trend. However, it is important to note that the stock has outperformed the market (BSE 500) by a significant margin, with a return of 3690.75% in the last year.

In conclusion, while Marsons may have shown strong performance in the past year, its high debt and weak long-term growth are cause for concern. The recent downgrade to 'Sell' by MarketsMOJO highlights the need for caution when considering investing in this smallcap company in the electric equipment industry.