Redington Downgraded to 'Sell' by MarketsMOJO, Technical Indicators Point to Bearish Outlook

Redington, a midcap IT hardware company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 30, 2024. This downgrade comes after the company reported flat results in September 2024 and a low debtors turnover ratio of 5.82 times. The stock is currently in a bearish range and the technical trend has deteriorated from mildly bearish to bearish on October 9, 2024. Multiple technical indicators such as MACD, Bollinger Band, and KST also suggest a bearish outlook for the stock.
However, there are some positive factors for Redington. The company has shown high management efficiency with a ROCE of 34.97%. It also has a low debt to equity ratio of 0 times on average. In terms of long-term growth, Redington has shown a steady increase in net sales and operating profit at an annual rate of 13.26% and 13.47%, respectively. Its ROCE of 21.1 indicates a fair valuation with a 1.9 enterprise value to capital employed.

Despite these positive factors, the stock is currently trading at a fair value compared to its historical valuations. In the past year, while the stock has generated a return of 25.90%, its profits have fallen by -3%. Additionally, Redington has a high institutional holding of 76.16%, indicating that these investors have better capabilities and resources to analyze the fundamentals of the company compared to retail investors.

With a market cap of Rs 13,036 crore, Redington is the second biggest company in the IT hardware sector, behind Tejas Networks, and constitutes 27.12% of the entire sector. Its annual sales of Rs 92,116.27 crore also make up 92.91% of the industry. While Redington may have some positive aspects, the recent downgrade by MarketsMOJO and the bearish technical indicators suggest a cautious approach for investors.