West Coast Paper Mills downgraded to 'Sell' by MarketsMOJO due to negative financial performance

West Coast Paper Mills, a smallcap company in the paper and paper products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 1, 2024. This downgrade is based on the company's negative financial performance in the last quarter, with a decrease in net sales by 9.6%. This is the second consecutive quarter where the company has reported negative results.
The company's PBDIT (profit before depreciation, interest, and taxes) and operating profit to net sales have also hit their lowest levels at Rs 169.63 crore and 15.85%, respectively. Additionally, the PBT (profit before tax) less OI (other income) has also decreased to its lowest at Rs 115.06 crore.

However, West Coast Paper Mills has shown high management efficiency with a ROE (return on equity) of 21.66%. It also has a strong ability to service debt with a low debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 0.57 times. The company has also shown healthy long-term growth with an annual growth rate of 17.58% in net sales and 44.30% in operating profit.

The technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has deteriorated from mildly bullish on June 28, 2024, and has generated a return of 2.4% since then. With a ROE of 21.3, the stock is currently trading at an attractive valuation with a price to book value of 1.4. It is also trading at a fair value compared to its historical valuations.

Institutional investors have shown an increasing interest in West Coast Paper Mills, with a 0.72% increase in their stake in the previous quarter. They currently hold 15.32% of the company, and their resources and capabilities allow them to analyze the company's fundamentals better than retail investors.

With a market cap of Rs 4,437 crore, West Coast Paper Mills is the second-largest company in the paper and paper products industry, behind JK Paper. Its annual sales of Rs 4,447.69 crore make up 15.50% of the industry. While the stock has generated a return of 37.08% in the past year, its profits have decreased by 27.4%. Based on these factors, MarketsMOJO has downgraded the stock to a 'Sell'.