North Eastern Carrying Corporation Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt Levels

North Eastern Carrying Corporation, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO on March 6, 2024. This decision was based on the company's 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 -1.43% CAGR growth in net sales over the last 5 years. This indicates a lack of growth and potential for the company. Additionally, North Eastern Carrying Corporation has a high debt to EBITDA ratio of 5.93 times, which means it may struggle to pay off its debt in the future.

In terms of recent performance, the company's results for December 2023 were flat. The interest expense for the quarter was also quite high at Rs 2.57 crore. These factors contribute to the overall negative outlook on the stock.

However, there are some positive technical factors to consider. The stock is currently in a mildly bullish range, and both the MACD and KST technical indicators are also bullish. Furthermore, with a ROCE of 7.3, the stock has a very attractive valuation with a 1.6 enterprise value to capital employed.

It is worth noting that the stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 73.38%, its profits have only risen by 6.4%. This could be a cause for concern for potential investors.

Majority shareholders of North Eastern Carrying Corporation are the promoters, which may indicate a lack of interest from other investors. However, the stock has still managed to outperform the market (BSE 500) with a return of 73.38% in the last year, compared to the market's return of 36.15%.

In conclusion, while North Eastern Carrying Corporation may have some positive technical factors, its weak long-term fundamentals and high debt levels make it a risky investment. Investors should carefully consider these factors before making any decisions.