Tamil Nadu Petro Products Downgraded to 'Sell' by MarketsMOJO: Factors to Consider

Tamil Nadu Petro Products, a microcap company in the petrochemical industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 6, 2024. This decision was based on several factors, including poor long-term growth, negative financial results, and expensive valuation.
Over the last 5 years, the company's net sales have only grown at an annual rate of 6.03%, while its operating profit has decreased by -7.06%. In addition, the company has declared negative results for the last 6 consecutive quarters, with a significant decrease in its PAT(Q) at Rs 8.60 crore, falling by -43.8%. Its ROCE(HY) is also at its lowest at 9.80%, and PBDIT(Q) at Rs 11.65 crore, the lowest it has been.

With a ROE of 7.1, the company's valuation is considered very expensive, with a price to book value of 1. This is further supported by the fact that the stock is currently trading at a premium compared to its average historical valuations. Despite generating a return of 15.16% in the past year, the company's profits have fallen by -35%.

Another concerning factor is that despite its size, domestic mutual funds hold only 0.01% of the company. This could indicate that they are not comfortable with the current price or the business itself. Furthermore, the company has underperformed the market in the last year, with a return of 15.16%, much lower than the market's (BSE 500) return of 32.32%.

On a positive note, the company has a low debt to equity ratio (avg) of 0 times, which could potentially help in the long run. Technically, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing bullish signs.

In conclusion, based on the current financial and market trends, it is advisable to approach Tamil Nadu Petro Products with caution and consider selling the stock.