Mercury EV-Tech Faces Market Challenges Despite Strong Sales Growth and High Debt Concerns

Mercury EV-Tech, a microcap player in the automobile industry, has experienced significant volatility, hitting a new 52-week low of Rs. 45.7 today. The stock has underperformed its sector, declining by 0.96% and marking a three-day losing streak with a total drop of 7.07%. Currently, Mercury EV-Tech is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a bearish trend.
Over the past year, the stock has seen a substantial decline of 37.42%, contrasting sharply with the Sensex's modest gain of 1.89%. Despite this downturn, the company has reported impressive growth in net sales, with an annual increase of 135.95%, and operating profit rising at 115.68%. The latest quarterly results show net sales of Rs. 30.68 crore, reflecting a 102.3% growth compared to the previous four-quarter average.

However, the company faces challenges, including a high Debt to EBITDA ratio of 9.32 times, which raises concerns about its ability to service debt. Additionally, its return on equity stands at a low 2.73%, highlighting profitability issues. With domestic mutual funds holding no stake, the market sentiment appears cautious regarding Mercury EV-Tech's valuation and performance.