Terai Tea Co Receives 'Sell' Rating from MarketsMOJO Due to Weak Long-Term Fundamentals

Terai Tea Co, a microcap company in the tea/coffee industry, has recently received a 'Sell' rating from MarketsMOJO on November 8, 2024. This downgrade is based on several factors that indicate weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's poor growth in net sales over the last 5 years, with a CAGR of -1.03%. Additionally, Terai Tea Co's ability to service its debt is weak, as shown by its EBIT to Interest ratio of -1.93. The company has also reported losses, resulting in a negative return on capital employed.

Another concerning factor is the stock's risky nature, as it is currently trading above its average historical valuations. While the stock has generated a high return of 147.55% in the past year, its profits have only increased by 74.6%. This is reflected in the company's low PEG ratio of 0.2.

On a positive note, Terai Tea Co declared very positive results in June 2024, with a growth in operating profit of 5200%. The company's net sales for the first 9 months of the year have also increased by 45.03%, with a higher PAT of Rs 7.85 crore and PBDIT of Rs 1.30 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with indicators such as MACD, KST, and OBV showing bullish signals. However, the majority of the company's shareholders are promoters, which may raise concerns for potential investors.

Despite generating a high return of 147.55% in the past year, Terai Tea Co has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. This, combined with the company's weak long-term fundamentals, makes it a risky investment option. Investors are advised to carefully consider these factors before making any decisions regarding Terai Tea Co's stock.