Sterling & Wilson Renewable Energy Downgraded to 'Sell' by MarketsMOJO on June 5th, 2024.

Sterling & Wilson Renewable Energy, a midcap engineering company, has recently been downgraded to a 'Sell' by MarketsMOJO on June 5th, 2024. This decision was based on several factors, including weak long-term fundamental strength with a -223.27% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of -1.00 times, indicating a low ability to service debt. The return on equity (avg) of 6.98% also signifies low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's risky negative EBITDA. This, coupled with the fact that the stock is trading at a higher risk compared to its average historical valuations, raises concerns for investors. While the stock has generated a return of 126.55% in the past year, its profits have only risen by 81.9%.

Another concerning factor is that 37.16% of promoter shares are pledged. In times of falling markets, this can put additional downward pressure on stock prices.

However, there are some positive aspects to consider. The company declared very positive results in March 2024, with a growth in operating profit of 457.69%. It also has the highest operating profit to interest (Q) at 1.20 times, net sales (Q) at Rs 1,178.01 crore, and PBDIT (Q) at Rs 29.35 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend.

In terms of performance, Sterling & Wilson Renewable Energy has been beating the market in the long term as well as the near term. Along with generating 126.55% returns in the last year, the stock has outperformed BSE 500 in the last 3 years, 1 year, and 3 months.

Overall, while there are some positive aspects to the company's recent performance, the downgrade to 'Sell' by MarketsMOJO highlights some concerning factors that investors should consider before making any decisions.