North Eastern Carrying Corp Downgraded to 'Sell' by MarketsMOJO: Weak Fundamentals and High Debt Cause Concern

North Eastern Carrying Corporation, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak net sales growth, with a CAGR of -1.58% over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.93 times, indicating a low ability to service its debt. Furthermore, the company has only been able to generate a return on equity of 4.68%, which is considered low.

In terms of recent performance, the company's results for September 2023 were flat, with the lowest operating cash flow of Rs -14.41 Cr and the lowest EPS of Rs 0.15. However, there are some bullish factors for the stock, such as being in a mildly bullish range and having multiple bullish indicators like MACD, Bollinger Band, and OBV.

Despite these factors, the stock is trading at an attractive valuation with a ROCE of 7.3 and an enterprise value to capital employed ratio of 1.6. It is also currently trading at a discount compared to its average historical valuations. However, while the stock has generated a return of 33.77% in the past year, its profits have only risen by 20%.

The majority shareholders of North Eastern Carrying Corporation are the promoters, and the company has consistently outperformed the BSE 500 index in the last 3 annual periods. However, with the recent downgrade by MarketsMOJO, investors may want to carefully consider their investment in this microcap logistics company.