Wheels India . Downgraded to 'Sell' by MarketsMOJO, Weak Fundamentals and Underperformance Cited

Wheels India ., a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 25, 2024. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 8.43%, poor long-term growth with net sales growing at an annual rate of 7.53% and operating profit at 5.30% over the last 5 years, and a high debt to EBITDA ratio of 3.70 times, indicating a low ability to service debt.
In addition, the stock has underperformed the market in the last year, generating a return of only 1.15% compared to the market's return of 33.56%. The technical trend for the stock is currently sideways, indicating no clear price momentum, and has generated a negative return of -5.18% since October 25, 2024.

However, there are some positive factors for the company, such as its strong performance in the first half of 2024, with a 93.31% growth in PAT and 82.9% growth in PBT less OI. The company also has a high ROCE of 12.20%, which is the highest in the industry.

From a valuation perspective, Wheels India . is currently trading at a discount compared to its historical average, with a very attractive ROCE of 11.1 and an enterprise value to capital employed ratio of 1.5. Additionally, while the stock has only generated a return of 1.15% in the last year, its profits have increased by 38.1%, resulting in a low PEG ratio of 0.6.

It is worth noting that the majority shareholders of Wheels India . are the promoters, indicating their confidence in the company's future prospects. However, based on the current data and analysis, MarketsMOJO has downgraded the stock to a 'Sell' and advises investors to carefully consider their options before making any investment decisions.