Venkys (India) Downgraded to 'Sell' by MarketsMOJO, Poor Long-Term Growth and Technical Trends Raise Concerns

Venkys (India), a smallcap FMCG company, has recently been downgraded to a 'Sell' by MarketsMOJO on May 31, 2024. This decision was based on the company's poor long-term growth, with an annual operating profit growth rate of -26.70% over the last 5 years. The stock is also currently in a Mildly Bearish range, with a technical trend that has deteriorated from Sideways on May 31, 2024, resulting in a -1.49% return since then. The MACD and Bollinger Band technical factors are also Bearish, indicating a potential downward trend for the stock.
One concerning factor is that despite its size, domestic mutual funds hold only 0.13% of the company. This could suggest that they are not comfortable with the stock's current price or the business itself. Additionally, Venkys (India) has underperformed the market in the last year, with a return of only 7.39% compared to the market's 33.06% return.

On a positive note, the company has a strong ability to service debt, with a low Debt to EBITDA ratio of 0 times. It also has a higher PAT (9M) at Rs 59.66 Cr and the highest PBDIT(Q) at Rs 50.03 cr. The operating profit to net sales(Q) is also the highest at 5.58%. However, with a ROE of 5.8, the stock is currently fairly valued with a 1.8 Price to Book Value. It is also trading at a premium compared to its average historical valuations.

In the past year, while the stock has generated a return of 7.39%, its profits have only risen by 12.2%. This results in a PEG ratio of 2.6, indicating that the stock may be overvalued. Overall, with the recent downgrade and various factors to consider, it may be wise for investors to approach Venkys (India) with caution.