TVS Electronics Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Negative Profits

TVS Electronics, a microcap IT hardware company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 10, 2024. This decision was based on the company's poor long-term growth, with net sales declining at an annual rate of -15.75% and operating profit at -8.85% over the last 5 years. In addition, the company's recent results for June 2024 showed a significant decrease in profits, with a PAT(Q) of -1.26 crore, falling at -1966.7%.
One of the main reasons for the 'Sell' rating is the company's risky negative operating profits. Despite generating a return of 12.62% in the past year, the company's profits have fallen by -121.7%. This is a cause for concern for investors, especially considering that domestic mutual funds hold only 0.02% of the company. This low stake may indicate that these funds are not comfortable with the company's current price or business.

Furthermore, TVS Electronics has underperformed the market in the last 1 year, with a return of only 12.62% compared to the market's (BSE 500) return of 34.61%. This is another red flag for potential investors.

On the positive side, the company has a low debt to equity ratio (avg) of 0.03 times, which is a good sign for its financial stability. Additionally, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

In conclusion, while TVS Electronics may seem like an attractive investment due to its microcap size, it is important to consider the company's poor long-term growth, negative operating profits, and underperformance in the market. Investors should also take note of the low stake held by domestic mutual funds and the company's recent decrease in profits.