North Eastern Carrying Corporation downgraded to 'Sell' by MarketsMOJO due to weak fundamentals.

North Eastern Carrying Corporation, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO on January 16, 2024. 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 -1.58% CAGR 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's return on equity has been consistently low at 4.68%, further highlighting its lack of profitability.

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, the stock is currently in a mildly bullish range and has shown a 1.06% return since January 5, 2024. Multiple technical indicators, such as MACD, Bollinger Band, KST, and OBV, also suggest a bullish trend for the stock.

Despite these positive technical indicators, the company's valuation is still considered attractive, with a ROCE of 7.3 and an enterprise value to capital employed ratio of 1.6. Additionally, the stock is currently trading at a discount compared to its average historical valuations. However, it is worth noting that while the stock has generated a return of 22.97% over the past year, its profits have only risen by 20%.

In conclusion, North Eastern Carrying Corporation's recent downgrade to a 'Sell' by MarketsMOJO is based on its weak long-term fundamentals and low profitability. While the stock is currently showing a mildly bullish trend, investors should carefully consider the company's financial health before making any investment decisions.