Saboo Sodium Chloro downgraded to 'Sell' by MarketsMOJO due to weak fundamentals

Saboo Sodium Chloro, a microcap company in the FMCG industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 6, 2024. This decision was based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the downgrade is the company's low ability to service debt, with a high Debt to EBITDA ratio of 6.59 times. This means that the company may struggle to make payments on its debt obligations, which can negatively impact its financial stability.

Additionally, Saboo Sodium Chloro has only seen a 13.42% CAGR growth in operating profits over the last 5 years, which is considered weak. This indicates that the company may not be performing as well as its competitors in the industry.

Furthermore, the company's Return on Equity (avg) is only 0.71%, which signifies low profitability per unit of shareholders' funds. This, combined with a very expensive valuation with a 2.4 Price to Book Value and a PEG ratio of 0.1, suggests that the stock may be overvalued.

On a positive note, Saboo Sodium Chloro has shown positive results in June 2024, with a significant growth in PBT LESS OI(Q) at Rs 1.99 crore (11471.4%) and NET SALES(9M) at Rs 45.49 crore (23.82%). However, the company's profits have only risen by 333.7% in the past year, while the stock has generated a return of 42.47%.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. However, the majority of shareholders are non-institutional, which may indicate a lack of confidence in the company's future prospects.

In conclusion, based on the current information and analysis, MarketsMOJO has downgraded Saboo Sodium Chloro to a 'Sell'. Investors should carefully consider these factors before making any decisions regarding this stock.