Sarthak Metals Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth

Sarthak Metals, a microcap company in the ferrous metal industry, has recently been downgraded to a 'Sell' by MarketsMOJO on February 20, 2024. This decision was based on the company's poor long-term growth, with net sales and operating profit declining at an annual rate of -13.02% and -18.90% respectively over the last 5 years.
In addition, the company has declared negative results for the past 4 consecutive quarters, with a significant fall in net sales of -18.65% in December 2023. The profits have also taken a hit, with a -77.1% decrease in PAT(Q) and the lowest ROCE(HY) at 28.95%. PBDIT(Q) is also at its lowest at Rs 2.46 crore.

Furthermore, with a ROE of 16.1, the stock is currently trading at an expensive valuation with a 3.3 price to book value. However, it is worth noting that the stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of 59.14% in the past year, the company's profits have fallen by -43.7%.

On the positive side, Sarthak Metals has shown high management efficiency with a ROE of 31.56% and a strong ability to service debt with a low debt to EBITDA ratio of 0.30 times. The stock is also technically in a mildly bullish range, with multiple factors such as MACD, KST, DOW, and OBV indicating a bullish trend.

The majority shareholders of Sarthak Metals are the promoters, and the company has consistently generated returns over the last 3 years. In fact, it has outperformed BSE 500 in each of the last 3 annual periods. However, considering the recent downgrade and the company's poor long-term growth, it may be wise for investors to exercise caution before investing in Sarthak Metals.