Super Tannery Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Underperformance

Super Tannery, a microcap company in the leather industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 30, 2024. This decision was based on weak long-term fundamental strength, with a -1.13% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 4.22 times, indicating a low ability to service debt. The company's return on equity (avg) of 5.75% also signifies low profitability per unit of shareholders' funds.
In the latest quarter, Super Tannery's results were flat, with interest expenses growing at a high rate of 55.21%. Furthermore, 51.12% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets.

The stock has also underperformed the market in the last 1 year, generating a return of 28.14% compared to the market's (BSE 500) returns of 39.48%. However, the stock is currently in a mildly bullish range, and its MACD and KST technical factors are also bullish.

On a positive note, Super Tannery has an attractive valuation with a ROCE of 6.5 and an enterprise value to capital employed ratio of 1.2. The stock is also trading at a discount compared to its average historical valuations. However, its profits have only risen by 6.5% in the past year, resulting in a PEG ratio of 3, which may not be favorable for investors.

Overall, Super Tannery's stock has been downgraded to 'Sell' due to its weak long-term fundamentals and underperformance in the market. Investors should carefully consider these factors before making any investment decisions.