Swan Energy Receives 'Sell' Rating from MarketsMOJO: Here's Why.

Swan Energy, a midcap textile company, has recently received a 'Sell' rating from MarketsMOJO on October 14, 2024. This downgrade is based on several factors that indicate a negative outlook for the company.
One of the main reasons for the 'Sell' rating is the poor management efficiency of Swan Energy, with a low Return on Capital Employed (ROCE) of 1.18%. This signifies low profitability per unit of total capital, which is a cause for concern. Additionally, the company has a high debt to equity ratio of 2.27 times, which further adds to its financial struggles.

Technically, the stock is also in a bearish range, with multiple indicators such as MACD, Bollinger Band, and KST showing a negative trend. This has resulted in a -1.37% return since the downgrade on October 14, 2024.

Furthermore, the stock is currently trading at a discount compared to its historical valuations, with an expensive valuation of 2.4 Enterprise value to Capital Employed. Although the company has shown healthy long-term growth in terms of net sales and operating profit, its profits have risen by 493.5% in the past year, resulting in a PEG ratio of 0.1.

On a positive note, Swan Energy has declared outstanding results in June 2024, with a growth in net profit of 84.83%. The company has also consistently declared positive results for the last 7 quarters, with a high PAT(Q) of Rs 138.94 crore, growing at 87.7%. Additionally, the company has a high institutional holding of 26.65%, indicating their confidence in the company's fundamentals.

Despite generating 83.99% returns in the last year and outperforming BSE 500 in the last 3 annual periods, Swan Energy's current financial struggles and negative indicators have led to the 'Sell' rating by MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.