Sri Ramakrishna Mills downgraded to 'Sell' due to high debt and weak fundamentals

Sri Ramakrishna Mills (Coimbatore) is a microcap textile company that has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-08-13. This downgrade is due to the company's high debt and weak long-term fundamental strength. With a debt to equity ratio of 0 times, the company's financial health is a cause for concern.
In addition, the company's ROCE (Return on Capital Employed) is at 7, indicating an expensive valuation with an enterprise value to capital employed ratio of 1.8. However, the stock is currently trading at a discount compared to its average historical valuations.

Despite generating a return of 137.39% in the past year, the company's profits have only risen by 601%. This could be a red flag for investors, as it suggests that the stock's performance may not be sustainable in the long run.

On a positive note, Sri Ramakrishna Mills (Coimbatore) has declared positive results for the last 5 consecutive quarters. Its PBT (Profit Before Tax) has grown by 41.2% and its net sales have reached a record high of Rs 21.66 crore. Additionally, its PBDIT (Profit Before Depreciation, Interest, and Taxes) has also reached a record high of Rs 4.47 crore.

Technically, the stock is currently in a mildly bullish range, with indicators such as MACD, Bollinger Band, and KST all pointing towards a bullish trend.

The majority shareholders of Sri Ramakrishna Mills (Coimbatore) are the promoters, which could be seen as a positive sign for the company's future prospects.

However, it is important to note that the stock has outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. This could indicate that the stock's current performance may not be sustainable in the long term.

In conclusion, while Sri Ramakrishna Mills (Coimbatore) may have shown market-beating performance in the near term, its high debt and weak long-term fundamentals make it a risky investment. Investors should carefully consider these factors before making any investment decisions.