Raja Bahadur International Downgraded to 'Sell' by MarketsMOJO Due to High Debt Levels and Weak Fundamental Strength

Raja Bahadur International, a microcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 3rd, 2024. This decision was based on the company's high debt levels, with a debt-to-equity ratio of 11.19 times, indicating a weak long-term fundamental strength. Additionally, the company's average debt-to-equity ratio is at a high of 14.32 times, further highlighting its financial struggles.
Furthermore, Raja Bahadur International has a low profitability per unit of total capital, with a return on capital employed (ROCE) of only 2.04%. This is reflected in its expensive valuation, with an enterprise value to capital employed ratio of 2.4. The stock is currently trading at a discount compared to its historical valuations, but its profits have only risen by 116.7% in the past year, resulting in a PEG ratio of 1.9.

While the company did show positive results in June 2024, with a higher profit after tax of Rs 0.27 crore and a record high ROCE of 7.09%, its net sales for the quarter were also at a high of Rs 7.19 crore. However, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend.

Despite its recent market-beating performance, with a return of 131.69% in the last year, Raja Bahadur International's financial struggles and high debt levels have led to its downgrade to a 'Sell' by MarketsMOJO. Investors should carefully consider these factors before making any decisions regarding this microcap textile company.