Vishal Fabrics Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt

Vishal Fabrics, a microcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 16, 2024. This decision was based on the company's weak long-term fundamental strength, with a 15.26% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 3.16 times, indicating a low ability to service debt.
In the latest quarter, Vishal Fabrics reported flat results with a decline of -23.46% in PAT (9M) and an increase of 26.33% in interest (HY). Despite its small size, the company has not attracted much interest from domestic mutual funds, who typically conduct in-depth research on companies before investing. This could suggest that the mutual funds are either not comfortable with the company's current price or its business.

On a positive note, the stock is currently in a mildly bullish range and its MACD and KST technical factors are also bullish. With a ROCE of 16.4, the stock is considered to have an attractive valuation with a 1.3 enterprise value to capital employed. It is also trading at a discount compared to its average historical valuations. However, in the past year, while the stock has generated a return of 74.42%, its profits have fallen by -34.8%.

Despite its market-beating performance in the last year, Vishal Fabrics may not be a wise investment choice due to its weak fundamentals and high debt. Investors should carefully consider these factors before making any decisions regarding this microcap textile company.