S.M. Gold Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt

S.M. Gold, a microcap company in the diamond and gold jewellery industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 14, 2024. This decision was based on several factors, including the company's weak long-term fundamental strength due to operating losses and poor growth in operating profit over the last 5 years.
Additionally, S.M. Gold has a high debt to EBITDA ratio of 9.72 times, indicating a low ability to service debt. In the most recent quarter, the company's PBDIT and EPS were at their lowest, with a negative value of Rs -0.20 and Rs -0.35 respectively. This has resulted in a flat performance for the company in June 2024.

However, there are some positive technical factors for the stock, as it is currently in a mildly bullish range and its MACD and KST indicators are also bullish. With a ROCE of 6.1, the stock is considered to have a very attractive valuation with a 1.4 enterprise value to capital employed. It is also trading at a discount compared to its average historical valuations.

It is worth noting that S.M. Gold has outperformed the market (BSE 500) in the past year, generating a return of 90.54%. However, its profits have fallen by -8.1% during this time. The majority shareholders of the company are non-institutional investors.

In conclusion, while S.M. Gold has shown market-beating performance in the past year, its weak long-term fundamentals and high debt to EBITDA ratio have led to a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.