Supertex Industries Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Underperformance

Supertex Industries, a microcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 28, 2024. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak net sales growth, with only a 4.88% CAGR over the last 5 years. Additionally, Supertex Industries has a high debt to EBITDA ratio of 5.84 times, indicating a low ability to service its debt. This can be a cause for concern for investors.

From a technical standpoint, the stock is currently in a mildly bearish range. The technical trend has deteriorated from sideways to bearish since October 25, 2024, resulting in a -4.39% return. The MACD and Bollinger Band technical factors also suggest a bearish trend.

Furthermore, Supertex Industries has underperformed the market in the last year, with a return of only 13.33% compared to the market's return of 34.46% (BSE 500). This could be a red flag for potential investors.

On a positive note, the company has declared positive results for the last 4 consecutive quarters, with a 61.99% growth in net sales for the last 9 months. It also has a very attractive valuation with a ROCE of 4.2 and an enterprise value to capital employed ratio of 0.7. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

However, it is important to note that while the stock has generated a return of 13.33% in the last year, its profits have only risen by 2%. This results in a PEG ratio of 0.7, which could be a cause for concern for investors.

It is also worth mentioning that the majority of shareholders in Supertex Industries are non-institutional investors. This could potentially lead to higher volatility in the stock price.

In conclusion, while Supertex Industries has shown positive results in the last few quarters, the overall weak fundamental strength and underperformance in the market make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.