National Plastic Industries Downgraded to 'Sell' by MarketsMOJO: Weak Fundamentals and Declining Performance

National Plastic Industries, a microcap company in the plastic products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 30, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor growth, and low ability to service debt.
The company's average Return on Capital Employed (ROCE) is only 7.11%, indicating a weak long-term fundamental strength. Additionally, over the last 5 years, the company has seen a negative annual growth rate of -2.17% in Net Sales and only 4.92% in Operating profit. This is further compounded by a high Debt to EBITDA ratio of 5.42 times, indicating a low ability to service debt.

In the most recent quarter, the company's results were flat, with a PAT of Rs 1.01 crore, which is a decrease of -72.85% compared to the same period last year. The PBDIT (Q) was also at its lowest at Rs 1.51 crore, and the Operating Profit to Net Sales (Q) was at its lowest at 6.21%. These numbers show a decline in the company's performance.

Furthermore, National Plastic Industries has underperformed the market in the last 1 year, with a return of only 19.75%, compared to the market's (BSE 500) return of 39.48%. This indicates that the stock has not been able to keep up with the market's performance.

On a technical level, the stock is currently in a Mildly Bullish range, with both the MACD and KST technical factors also being Bullish. However, with an ROCE of 13.7, the stock is still considered to have an attractive valuation, with a 1.4 Enterprise value to Capital Employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

It is worth noting that while the stock has generated a return of 19.75% in the last year, its profits have fallen by -60.4%. This could be a cause for concern for potential investors.

It is also important to mention that the majority shareholders of National Plastic Industries are the promoters, which could potentially impact the decision-making and direction of the company.

In conclusion, based on the current data and performance of National Plastic Industries, MarketsMOJO has downgraded the stock to a 'Sell'. Investors should carefully consider these factors before making any investment decisions.