Sundaram Multi Pap downgraded to 'Sell' by MarketsMOJO due to weak performance and financial health

Sundaram Multi Pap, a microcap company in the printing and stationery industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 30, 2024. This decision was based on various factors, including the company's weak long-term fundamental strength, poor ability to service its debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the 'Sell' rating is the company's weak long-term performance, with a -11.78% CAGR growth in operating profits over the last 5 years. Additionally, the company's EBIT to Interest ratio of 0.76 indicates a weak ability to service its debt. Furthermore, the company has only been able to generate a low average Return on Equity of 3.03%, which is a sign of low profitability.

From a technical standpoint, the stock is currently in a Mildly Bearish range and has deteriorated from a Mildly Bullish trend on September 27, 2024. This has resulted in a -2.38% return since then. Multiple technical indicators, such as MACD, Bollinger Band, and KST, also suggest a bearish trend for the stock.

In terms of performance, the stock has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of -14.07% in the last year alone. However, the company did show positive results in June 2024, with its highest net sales and PBDIT in the quarter. The operating profit to net sales ratio was also at its highest at 8.75%.

Despite the recent positive results, the company's ROCE of -0.8 and attractive valuation with a 1.3 Enterprise value to Capital Employed ratio, suggest that the stock is still trading at a discount compared to its historical valuations. However, it is important to note that while the stock has generated a return of -14.07% in the past year, its profits have fallen by -157.2%.

It is also worth mentioning that the majority of the company's shareholders are non-institutional investors. Overall, the downgrade to 'Sell' by MarketsMOJO highlights the weak performance and financial health of Sundaram Multi Pap, making it a risky investment option for potential investors.