RattanIndia Power Faces Challenges Amid High Debt and Pledged Shares

Dec 23 2024 06:49 PM IST
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RattanIndia Power has recently experienced a revision in its score by MarketsMojo, reflecting concerns over its long-term fundamental strength. The stock's performance indicators, including a high Debt to EBITDA ratio and a significant percentage of pledged promoter shares, contribute to its current mildly bearish outlook. Despite these challenges, the company has shown positive quarterly results and has outperformed the broader market over the past year.
RattanIndia Power, a midcap player in the power generation and distribution sector, has recently faced challenges that have raised concerns among analysts. The company has reported a modest Return on Capital Employed (ROCE) of 5.03%, indicating weak long-term fundamental strength. Additionally, RattanIndia Power's high Debt to EBITDA ratio of 9.44 times suggests a low capacity to service its debt obligations.

Despite these financial pressures, the company has shown resilience with positive results over the last three consecutive quarters. Operating cash flow reached an impressive Rs 1,305.76 crore, while profit after tax for the half-year stood at Rs 91.65 crore. The stock has performed well over the past year, generating a return of 48.31%, significantly outpacing the BSE 500 index, which returned 16.96%.

However, the stock is currently in a mildly bearish technical range, with indicators such as RSI and MACD reflecting a downward trend. Furthermore, a concerning 88.65% of promoter shares are pledged, which could exert additional pressure on stock prices in a declining market.
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