Ramky Infrastructure Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Weak Fundamentals

Ramky Infrastructure, a smallcap company in the capital goods industry, has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-06-26. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the last 5 years, the company's net sales have only grown at an annual rate of 4.32%, and it has a debt to equity ratio of 4.59 times. Additionally, its return on equity has been low at 3.50%, indicating low profitability per unit of shareholders' funds.
From a technical standpoint, the stock is currently in a Mildly Bearish range and has seen a decline of -3.28% since 24-Jun-24. Multiple factors, such as MACD, KST, and DOW, also suggest a Mildly Bearish trend for the stock.

Another concerning factor is that 25.7% of the company's promoter shares are pledged. In a falling market, this can put additional downward pressure on the stock prices. Moreover, the proportion of pledged holdings has increased by 0.57% over the last quarter.

However, the company has declared positive results for the last 6 consecutive quarters, with significant growth in PBT LESS OI(Q) at Rs 54.89 cr (1184.78%), PAT(Q) at Rs 57.36 cr (275.5%), and NET SALES(9M) at Rs 1,603.72 cr (20.28%). It also has a very attractive valuation with a ROCE of 19.3 and a 1.9 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations, and its profits have risen by 290.8% in the past year, resulting in a PEG ratio of 0.

In terms of performance, Ramky Infrastructure has outperformed the BSE 500 in the last 3 years, 1 year, and 3 months, with a return of 57.24% in the last year alone. However, considering the current market conditions and the company's financials, MarketsMOJO has downgraded the stock to a 'Sell'. Investors are advised to carefully evaluate their positions in Ramky Infrastructure and make informed decisions.