Orient Beverages Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Weak Fundamentals

Orient Beverages, a microcap company in the FMCG industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 1, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the past 5 years, the company's operating profit has seen a decline of -10.20%, indicating poor long-term growth. Additionally, Orient Beverages has a high debt to equity ratio of 2.53 times and a low return on equity of 6.77%, suggesting low profitability per unit of shareholders' funds.
Furthermore, the stock is currently trading at a discount compared to its historical valuations and has a very expensive valuation with a 1.8 enterprise value to capital employed. Despite generating a return of 182.53% in the past year, the company's profits have fallen by -97.9%.

On a positive note, Orient Beverages has shown promising results in the first quarter of 2024, with its net sales, PAT, and EPS reaching their highest levels at Rs 39.46 cr, Rs 2.68 cr, and Rs 12.35, respectively. The stock is also technically in a mildly bullish range, with its MACD and KST technical factors also showing bullish signals.

The majority shareholders of Orient Beverages are its promoters, and the company has consistently outperformed the BSE 500 index in the last 3 annual periods. While the stock has seen a significant return in the past year, investors should carefully consider the company's high debt and weak fundamental strength before making any investment decisions.