Poojawestern Metaliks Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals

Poojawestern Metaliks, a microcap company in the non-ferrous metal industry, has recently been downgraded to a 'Sell' by MarketsMOJO on May 28, 2024. This decision was based on the company's weak long-term fundamental strength, with a 19.73% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.60.
Despite declaring positive results for the last 5 consecutive quarters, Poojawestern Metaliks has a low profitability per unit of shareholders' funds, with a Return on Equity (avg) of 7.84%. However, there are some positive factors to consider, such as the company's ROCE (HY) being the highest at 11.84% and its NET SALES (Q) being the highest at Rs 16.01 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors being bullish. With a ROCE of 18.1, the stock is fairly valued with a 3 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. However, despite generating a return of 47.51% in the last year, the company's profits have only risen by 62.6%, resulting in a low PEG ratio of 0.4.

The majority shareholders of Poojawestern Metaliks are the promoters, indicating their confidence in the company's performance. In fact, the stock has outperformed the market (BSE 500) with a return of 47.51% compared to the market's return of 35.33% in the last year. While the company's performance has been impressive, MarketsMOJO's downgrade suggests caution for potential investors.