National Plastic Industries Downgraded to 'Sell' by MarketsMOJO: Weak Fundamentals and High Debt Raise Concerns

National Plastic Industries, a microcap company in the plastic products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 4th, 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) over the last 5 years has been 7.11%, indicating a weak long-term fundamental strength. Additionally, its net sales have grown at a negative annual rate of -2.17%, and operating profit has only grown at 4.92% over the same period, showing poor long-term growth.

Furthermore, National Plastic Industries has a high Debt to EBITDA ratio of 5.42 times, indicating a low ability to service debt. In the latest quarter, the company's profits have also fallen by -72.85%, with the lowest operating profit to net sales ratio at 6.21%.

In the past year, the stock has underperformed the market, generating a return of only 23.96%, compared to the market's (BSE 500) return of 37.63%. However, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend.

On the positive side, National Plastic Industries has an attractive valuation with a ROCE of 13.7 and a 1.4 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. However, despite the stock's positive technical factors, its profits have fallen by -60.4% in the past year.

It is worth noting that the majority shareholders of National Plastic Industries are the promoters, which may have an impact on the company's decision-making and future performance. Overall, MarketsMOJO's downgrade to 'Sell' suggests caution for investors considering National Plastic Industries as a potential investment option.