Sunil Industries Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt

Sunil Industries, a microcap company in the textile industry, has recently been downgraded to a 'Sell' by MarketsMOJO on June 11, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor growth in net sales and operating profit, and a high debt to EBITDA ratio.
The company's average Return on Capital Employed (ROCE) over the last 5 years has been 7.91%, indicating a weak long-term fundamental strength. Additionally, its net sales have only grown at an annual rate of 5.86%, while operating profit has grown at 13.20% over the same period, showing poor long-term growth.

Furthermore, Sunil Industries has a high debt to EBITDA ratio of 4.41 times, indicating a low ability to service debt. In the most recent quarter, the company's net sales were at its lowest at Rs 14.06 crore, and its EPS was also at its lowest at Rs 0.00.

On a positive note, the stock is currently in a mildly bullish range and its MACD and KST technical factors are also bullish. With a ROCE of 9.8, the stock has an attractive valuation with an enterprise value to capital employed ratio of 0.8. It is also trading at a discount compared to its average historical valuations.

However, over the past year, while the stock has generated a return of 82.27%, its profits have fallen by -34.9%. The majority shareholders of Sunil Industries are the promoters, and the stock has outperformed the market (BSE 500) with a return of 82.27% compared to the market's return of 36.93%.

In conclusion, Sunil Industries' stock has been downgraded to 'Sell' due to its weak long-term fundamental strength, poor growth, and high debt to EBITDA ratio. While the stock is currently in a mildly bullish range and has an attractive valuation, its profits have declined in the past year. Investors should carefully consider these factors before making any investment decisions.