Udaipur Cement Works Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Negative Results

Udaipur Cement Works, a smallcap company in the cement industry, has recently been downgraded to 'Sell' by MarketsMOJO on September 6, 2024. This decision was based on several factors, including the company's high debt-to-equity ratio of 2.33 times, which is significantly higher than the industry average. In addition, the company has declared negative results in the most recent quarter, with a PAT(Q) of -10.28 crore, a decrease of 344.2% from the previous quarter. The operating profit to interest ratio is also at its lowest at 1.35 times, while interest expenses have reached a high of 28.81 crore.
Despite being a smallcap company, Udaipur Cement Works has only 0.14% of its shares held by domestic mutual funds. This could indicate that these funds are not comfortable with the company's current price or its business. Furthermore, the company has consistently underperformed against the benchmark over the past 3 years, with a negative return of -0.45% in the last year alone.

On the positive side, Udaipur Cement Works has shown healthy long-term growth, with an annual growth rate of 65.80% in operating profit. However, the technical trend for the stock is currently sideways, with no clear price momentum. The stock's MACD and Bollinger Band technical factors also reflect this sideways trend.

In terms of valuation, Udaipur Cement Works is currently trading at a discount compared to its historical average. Its ROCE of 6.4 and attractive enterprise value to capital employed ratio of 1.5 make it an attractive option for investors. However, it is important to note that while the stock has generated a return of -0.45% in the past year, its profits have increased by 52.6%, resulting in a PEG ratio of 0.9.

Overall, the downgrade to 'Sell' by MarketsMOJO highlights the current challenges and risks faced by Udaipur Cement Works. Investors should carefully consider these factors before making any investment decisions.