Patel Engineering: Downgraded to 'Sell' by MarketsMOJO.

Patel Engineering, a midcap company in the capital goods industry, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 6.93%, poor long-term growth with an annual operating profit growth rate of 14.79% over the last 5 years, and a high Debt to EBITDA ratio of 6.77 times, indicating a low ability to service debt.
In addition, the company's recent financial results for September 2023 have shown a decline in profits, with PBT LESS OI(Q) falling by 29.5% and PAT(Q) falling by 13.8%. Non-operating income also makes up a significant portion of the company's profits, at 49.82% of PBT.

Another concerning factor for Patel Engineering is that 88.67% of its promoter shares are pledged. This means that in a falling market, the high percentage of pledged shares could put additional downward pressure on the stock prices.

On a positive note, the stock is currently in a mildly bullish range and has multiple bullish indicators such as MACD, Bollinger Band, and KST. It also has an attractive valuation with an ROCE of 11.8 and a 1.4 Enterprise value to Capital Employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

Despite the recent downgrade, Patel Engineering has shown market-beating performance in both the long term and near term. In the last year, the stock has generated a return of 275.38%, while its profits have risen by 21.7%. It has also outperformed the BSE 500 in the last 3 years, 1 year, and 3 months.

Investors should carefully consider all these factors before making any decisions regarding Patel Engineering stock. While the company has shown strong performance in the past, the current market conditions and financial indicators suggest a cautious approach.