Paras Defence and Space Technologies Downgraded to 'Sell' by MarketsMOJO

Paras Defence and Space Technologies, a smallcap company in the defence industry, has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-09-16. This decision was based on the company's poor long-term growth, expensive valuation, and lack of interest from domestic mutual funds.
Over the past 5 years, the company's operating profit has only grown at an annual rate of -4.61%, indicating a lack of consistent growth. Additionally, with a ROCE of 7.6, the company's valuation is considered to be very expensive, with an enterprise value to capital employed ratio of 9.

Furthermore, the stock is currently trading at a premium compared to its historical valuations, which may not be sustainable in the long run. Despite generating a return of 50.37% in the last year, the company's profits have only increased by 16.8%, resulting in a high PEG ratio of 6.5.

Another concerning factor is the low stake held by domestic mutual funds in the company, at only 0.16%. This could indicate that these funds are not comfortable with the current price or the business of Paras Defence and Space Technologies.

On a positive note, the company has a low debt to equity ratio and has recently declared positive results in Jun'2024 after two consecutive negative quarters. Its net sales and PBDIT have also reached their highest levels in the last quarter, at Rs 83.57 cr and Rs 24.12 cr respectively. However, the technical trend for the stock is currently sideways, with no clear price momentum.

Despite outperforming the market (BSE 500) with a return of 50.37% in the last year, the stock's technical trend has deteriorated since 16-Sep-24, generating a negative return of -1.53%. Overall, MarketsMOJO's downgrade to 'Sell' for Paras Defence and Space Technologies is based on its analysis of the company's financial performance and market trends.