Current Rating Overview
MarketsMOJO assigns North Eastern Carrying Corporation Ltd a 'Strong Sell' rating, supported by a Mojo Score of 15.0. This score represents a significant decline from the previous 'Sell' rating, which had a Mojo Score of 37. The rating change took place on 28 May 2025, reflecting a reassessment of the company's fundamentals, valuation, financial trends, and technical outlook. Investors should note that all data and returns referenced here are as of 25 December 2025, ensuring a current perspective on the stock's status.
Quality Assessment
The company's quality grade is below average, indicating weaknesses in its core operational and financial health. As of 25 December 2025, North Eastern Carrying Corporation Ltd exhibits a weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of just 6.32%. This modest ROCE suggests limited efficiency in generating profits from capital investments. Furthermore, the company’s net sales have grown at a sluggish annual rate of 2.31% over the past five years, while operating profit has increased at a moderate 11.62% annually. These figures point to restrained growth prospects and operational challenges.
Valuation Perspective
Despite the weak quality metrics, the valuation grade is very attractive. This suggests that the stock is currently priced at levels that may appeal to value investors seeking bargains. However, an attractive valuation alone does not offset the risks posed by the company's deteriorating fundamentals and financial health. The microcap status of the company also implies limited liquidity and potentially higher volatility, factors that investors should carefully consider.
Financial Trend Analysis
The financial grade is very negative, reflecting troubling recent performance trends. The company has reported negative results for the last three consecutive quarters, including the quarter ended March 2025. The profit after tax (PAT) for the nine months ended 25 December 2025 stands at ₹5.36 crores, representing a decline of 42.98%. Meanwhile, interest expenses have surged by 48.44% to ₹4.75 crores in the latest six-month period, signalling rising financial strain. The half-year ROCE has dropped to a low of 4.83%, underscoring the company's diminished ability to generate returns on capital in the near term.
Technical Outlook
The technical grade is bearish, consistent with the stock's recent price performance. As of 25 December 2025, the stock has delivered a 48.63% loss over the past year and a 47.85% decline year-to-date. Shorter-term trends are also negative, with a 7.91% drop over the last month and a 15.78% fall over three months. This sustained downward momentum indicates weak investor sentiment and limited buying interest, which may continue to pressure the stock price in the near future.
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Long-Term and Recent Performance
North Eastern Carrying Corporation Ltd’s long-term performance has been below par, with the stock underperforming the BSE500 index over the past three years, one year, and three months. The company’s inability to generate positive returns over these periods highlights persistent operational and market challenges. The stock’s microcap status and sector placement in Transport Services add layers of risk, given the sector’s sensitivity to economic cycles and fuel price fluctuations.
Debt and Interest Burden
One of the critical concerns for investors is the company’s high leverage. The Debt to EBITDA ratio stands at 5.28 times, indicating a substantial debt load relative to earnings before interest, tax, depreciation, and amortisation. This elevated leverage increases financial risk, especially in a scenario where operating profits are under pressure and interest expenses are rising sharply. The growing interest burden, up by 48.44% in the latest six months, further constrains cash flows and limits the company’s flexibility to invest in growth or weather downturns.
Implications for Investors
The 'Strong Sell' rating reflects a comprehensive assessment of North Eastern Carrying Corporation Ltd’s current challenges. For investors, this rating signals caution and suggests that the stock is likely to face continued headwinds in the near to medium term. The combination of weak quality metrics, deteriorating financial trends, bearish technical signals, and high leverage creates a risk profile that is unfavourable for long or medium-term investment. While the valuation appears attractive, it is important to recognise that value alone does not guarantee a turnaround without improvements in operational and financial health.
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Summary
In summary, North Eastern Carrying Corporation Ltd’s 'Strong Sell' rating by MarketsMOJO is grounded in a thorough evaluation of its current financial and operational realities as of 25 December 2025. The company faces significant challenges including weak profitability, rising debt servicing costs, and negative recent earnings trends. The bearish technical outlook and substantial stock price declines reinforce the cautious stance. Investors should carefully weigh these factors before considering any exposure to this stock, recognising that the risks currently outweigh potential rewards.
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