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

Ramky Infrastructure, a midcap company in the capital goods industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 1, 2024. 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 high debt to equity ratio of 4.59 times. Additionally, the company has a low return on equity of 3.50%, indicating low profitability per unit of shareholders' funds.
Another concerning factor is that 25.7% of the company's promoter shares are pledged, which can put downward pressure on the stock prices during market downturns. However, the company has declared positive results for the last 6 consecutive quarters, with significant growth in profits and net sales. This may be a positive sign for the company's future performance.

On a technical level, the stock's trend is currently sideways, with no clear price momentum. The technical trend has also deteriorated since August 1, 2024, generating a -3.09% return. However, the company has an attractive valuation with a ROCE of 19.3 and a 2.4 enterprise value to capital employed. It is also trading at a discount compared to its historical valuations.

In the past year, the stock has generated a return of 68.05%, outperforming the BSE 500 index. It has also shown market-beating performance in the long term, with strong returns in the last 3 years, 1 year, and 3 months. However, it is important to note that this stock has a PEG ratio of 0.1, indicating that its profits have risen significantly faster than its stock price. Overall, MarketsMOJO's downgrade to 'Sell' for Ramky Infrastructure suggests caution for potential investors.