National Fittings Downgraded to 'Sell' by MarketsMOJO Due to Poor Performance

National Fittings, a microcap company in the castings/forgings industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 8, 2024. This decision was based on the company's poor long-term growth, negative results in the latest quarter, and underperformance in the market.
Over the last 5 years, National Fittings has only seen a 6.25% annual growth in net sales and a 4.00% growth in operating profit. In addition, the company declared negative results in June 2024 after 1 consecutive positive quarters, with a significant decrease in PAT(Q) at Rs 0.40 cr, falling at -51.9%. The DEBTORS TURNOVER RATIO(HY) is also at its lowest at 13.15 times, and NET SALES(Q) at Rs 15.14 cr, indicating a decline in performance.

Furthermore, the stock has generated a return of 19.29% in the last 1 year, which is much lower than the market (BSE 500) returns of 30.56%. However, the company does have a strong ability to service debt with a low Debt to EBITDA ratio of 1.34 times.

Technically, the stock is currently in a Mildly Bullish range, with the technical trend improving from Sideways on November 1, 2024, and generating -3.19% returns since then. The Bollinger Band, a key technical factor, has also been Bullish since November 1, 2024.

In terms of valuation, National Fittings has a Fair valuation with a 2 Price to Book Value and an ROE of 9.1. The stock is currently trading at a discount compared to its average historical valuations. However, while the stock has generated a return of 19.29% in the past year, its profits have only risen by 19.4%, resulting in a PEG ratio of 1.2.

It is also worth noting that the majority shareholders of National Fittings are non-institutional investors. Overall, with its recent downgrade to 'Sell' and various factors indicating poor performance, investors may want to approach National Fittings with caution.