Salona Cotspin downgraded to 'Sell' by MarketsMOJO due to high debt and negative growth

Salona Cotspin, a microcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on May 29, 2024. This decision was based on several factors, including the company's high debt to EBITDA ratio of 0 times, indicating a low ability to service debt. In addition, the company's financial results for December 2023 showed negative growth, with a -60.72% decrease in PAT (HY) and a -54.3% decrease in PBT LESS OI (Q). The operating profit to interest ratio was also at its lowest at 1.25 times.
Furthermore, Salona Cotspin has underperformed the market in the last year, with a return of only 16.63% compared to the market's 33.90% return. However, there are some positive aspects to the company, such as its high management efficiency with a ROCE of 0% and a healthy long-term growth rate of 38.61% in net sales.

The technical trend for the stock is currently sideways, indicating no clear price momentum. It has also been trading at a discount compared to its average historical valuations, with an attractive valuation of 1.3 Enterprise value to Capital Employed and a ROCE of 8.5. However, it is important to note that while the stock has generated a return of 16.63% in the past year, its profits have fallen by -46.8%.

It is worth mentioning that the majority shareholders of Salona Cotspin are the promoters of the company. Overall, while the company has some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO suggests caution for potential investors.