Shri Bajrang Alliance Downgraded to 'Sell' by MarketsMOJO: Weak Fundamentals and Technical Trend Raise Concerns

Shri Bajrang Alliance, a microcap company in the iron and steel industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 30, 2024. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and a bearish technical trend.
One of the main reasons for the downgrade is the company's weak Return on Capital Employed (ROCE) of 3.13%, which is below the industry average. Additionally, the company has a high Debt to EBITDA ratio of 6.01 times, indicating a low ability to service debt.

The stock is also currently in a mildly bearish range, with the technical trend deteriorating from mildly bullish on July 30, 2024. Multiple factors, such as RSI, MACD, Bollinger Band, and KST, are all bearish for the stock.

Another concerning factor is the decrease in promoter confidence, as they have reduced their stake in the company by -0.86% over the previous quarter. This could suggest a lack of confidence in the future of the business.

In the last year, the stock has underperformed the market, generating a return of only 1.35% compared to the market's (BSE 500) returns of 37.71%. However, the company did show positive results in March 2024, with a growth of 169.8% in PBT LESS OI(Q) and 28.6% in NET SALES(Q). The company's PAT(Q) also reached a record high of Rs 14.69 crore.

Despite the recent downgrade, the company does have some positive aspects. With a ROCE of 0.4, it has an attractive valuation and a low Enterprise value to Capital Employed ratio of 0.8. The stock is also currently trading at a discount compared to its average historical valuations. Additionally, while the stock has only generated a return of 1.35% in the last year, its profits have increased by 21%, resulting in a low PEG ratio of 0.3.

In conclusion, while Shri Bajrang Alliance may have some positive aspects, the recent downgrade by MarketsMOJO and the company's weak long-term fundamentals and technical trend suggest that it may be a risky investment at this time. Investors should carefully consider all factors before making any decisions regarding this stock.