Rane (Madras) Faces Downgrade to 'Sell' Despite Recent Positive Results

Rane (Madras) is a smallcap company in the auto ancillary industry. However, recent news from MarketsMOJO has downgraded their stock call to 'Sell' on January 23, 2024. This is due to weak long-term fundamental strength, with a -0.06% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 8.27 times, indicating a low ability to service debt.
Despite these factors, there have been some positive results for Rane (Madras) in September 2023. The company has shown its highest operating cash flow at Rs 129.62 Cr, highest return on capital employed at 11.88%, and highest inventory turnover ratio at 9.81 times. Technically, the stock is in a mildly bullish range, with MACD and KST technical factors also showing bullish signals.

With a ROCE of 8.1, the stock is fairly valued with a 2.2 enterprise value to capital employed. It is also currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 93.93%, while its profits have risen by 850.6%. This gives the company a PEG ratio of 0, indicating a potential undervaluation.

The majority shareholders of Rane (Madras) are the promoters, and the stock has shown market-beating performance with a return of 93.93% in the last year, compared to the market (BSE 500) return of 23.79%. While the stock may have some weaknesses, it is important to consider all factors and do thorough research before making any investment decisions.