Polson . Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Market Performance

Polson ., a microcap chemical company, has recently been downgraded to a 'Sell' by MarketsMOJO on June 18, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak long-term fundamental strength, with a -9.88% CAGR growth in operating profits over the last 5 years. Additionally, the company's EBIT to Interest (avg) ratio of 1.89 indicates a weak ability to service its debt. Furthermore, the company's Return on Equity (avg) of 7.10% is relatively low, indicating low profitability.

In the most recent quarter, Polson . saw flat results with its PBDIT(Q) at its lowest at Rs 3.10 crore and OPERATING PROFIT TO NET SALES (Q) at its lowest at 12.82%. Its PBT LESS OI(Q) was also at its lowest at Rs 0.71 crore. This underperformance in the market has also contributed to the downgrade, with the stock only generating a return of 5.64% in the last year, compared to the market's (BSE 500) returns of 37.27%.

Other factors that have influenced the downgrade include the stock being technically in a Mildly Bullish range, with its MACD and KST technical factors also being Bullish. However, with a ROCE of 6.5, the stock does have a Very Attractive valuation with a 1.2 Enterprise value to Capital Employed. It is also currently trading at a discount compared to its average historical valuations.

It is worth noting that while the stock has generated a return of 5.64% in the last year, its profits have risen by 31%, resulting in a PEG ratio of 1. This indicates that the stock may be overvalued compared to its earnings growth.

The majority shareholders of Polson . are the promoters, which may also have an impact on the company's decision-making and performance. Overall, the downgrade to 'Sell' by MarketsMOJO suggests caution for investors considering investing in Polson ., as the company's financials and market performance have not been strong in recent years.