Southern Petrochemical Industries Corporation downgraded to 'Sell' after reporting negative results

Southern Petrochemical Industries Corporation, a smallcap company in the fertilizer industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 2, 2024. This downgrade comes after the company reported Very Negative results for the quarter ending in March 2024, with a significant decrease in operating profit of -46.43%. This is the third consecutive quarter in which the company has declared negative results.
In addition, the company's PAT(Q) has fallen by -40.1% and its operating profit to interest (Q) is at its lowest at 1.30 times. The net sales (Q) have also decreased to its lowest at Rs 124.88 crore. These factors have led to the company underperforming in the market, with a return of only 25.32% in the last year, compared to the market's (BSE 500) return of 37.36%.

However, the company does have some positive aspects, such as a low Debt to EBITDA ratio of 1.46 times, indicating a strong ability to service debt. It also has a healthy long-term growth rate, with an annual growth rate of 46.36% in operating profit. Technically, the stock is in a Mildly Bullish range, with the key technical factor MACD being Bullish since July 2, 2024.

Despite these positives, the stock is currently trading at a discount compared to its average historical valuations. Its ROCE of 15.7 also indicates a fair valuation with a 1.5 Enterprise value to Capital Employed. However, investors should be cautious of the company's recent negative performance and the potential for further decline in profits.