Swelect Energy Systems Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Technicals

Swelect Energy Systems, a smallcap company in the electronics-components industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 27, 2024. This decision was based on several factors, including weak long-term fundamental strength with a -4.36% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of 0.99, and a low Return on Equity (avg) of 3.16%, indicating low profitability per unit of shareholders' funds.
From a technical standpoint, the stock is currently in a mildly bearish range, with a deteriorating trend since November 27, 2024, and a return of 2.19% since then. The MACD and KST technical factors are also bearish, further supporting the 'Sell' rating.

In terms of valuation, the stock has a high Price to Book Value of 1.9 and is trading at a discount compared to its average historical valuations. However, over the past year, the stock has generated a return of 96.07%, while its profits have only risen by 50.9%, resulting in a PEG ratio of 1.2.

One interesting factor to note is that despite its smallcap size, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business itself.

On a positive note, the company declared very positive results in September 2024, with a growth in net sales of 73.61%. The company also achieved its highest net sales and operating profit to interest ratio in the quarter, and its profits grew by 50.7%.

Overall, Swelect Energy Systems has consistently generated strong returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. However, with the recent downgrade to 'Sell' by MarketsMOJO and the weak fundamental and technical factors, investors may want to approach this stock with caution.