Tirupati Foam Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Weak Fundamentals

Tirupati Foam, a microcap company in the miscellaneous industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 15, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the past five years, the company has only seen a 1.63% annual growth in net sales and a 1.03% growth in operating profit. Additionally, Tirupati Foam's ability to service its debt is weak, with a poor EBIT to Interest ratio of 1.50. This signifies low profitability per unit of shareholders' funds.
In the most recent quarter, the company's net sales have fallen by 5.1% and its EPS is at its lowest at Rs 1.07. However, the stock is technically in a mildly bullish range and its MACD and KST technical factors are also bullish. With a ROCE of 9.9, the stock has an attractive valuation with a 1.3 Enterprise value to Capital Employed. It is also currently trading at a discount compared to its average historical valuations.

One positive aspect of Tirupati Foam is its market-beating performance. In the last year, the stock has generated a return of 46.53%, which is significantly higher than the market (BSE 500) returns of 35.67%. However, it is important to note that the majority shareholders of the company are promoters.

Overall, while Tirupati Foam may have had a strong market performance in the past year, its long-term fundamental strength and high debt make it a risky investment. Investors should carefully consider these factors before making any decisions regarding this microcap company.