Shri Keshav Cements & Infra Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Weak Fundamentals

Shri Keshav Cements & Infra, a microcap company in the cement industry, has recently been downgraded to a 'Sell' by MarketsMOJO on May 27, 2024. This decision was based on the company's high debt and weak long-term fundamental strength. With a debt to equity ratio of 40.53 times, the company's profitability per unit of total capital is low, with a return on capital employed of only 8.70%.
In addition, the company's valuation is considered very expensive with an enterprise value to capital employed ratio of 2. This is further supported by the fact that the stock is currently trading at a discount compared to its historical valuations. However, it should be noted that the stock has generated a return of 50.89% in the past year, with profits rising by 296.9%. The PEG ratio of the company is also at a low 0.2.

On a positive note, Shri Keshav Cements & Infra has declared positive results for the last two consecutive quarters, with a growth in operating profit of 33.87% in March 2024. The company also has a low debt-equity ratio of 1.88 times and a high operating profit to interest ratio of 2.83 times. It also has a strong cash position with cash and cash equivalents of Rs 14.39 crore.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown improvement since May 18, 2024, generating a return of 13.32%. The MACD and Bollinger Band technical factors also indicate a bullish trend.

Majority shareholders of Shri Keshav Cements & Infra are the promoters, and the company has consistently outperformed the BSE 500 index in the last three annual periods. While the stock may have generated positive returns in the past, the current financial situation and high debt levels suggest a 'Sell' recommendation for investors.