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 activity today, hitting a new 52-week low of Rs. 51. This decline marks a 4.14% drop from its intraday high and reflects an underperformance of 1.68% compared to its sector peers. The stock has consistently traded below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a challenging market position.
Over the past year, Mercury EV-Tech has faced a substantial decline of 30.83%, contrasting sharply with the Sensex's modest gain of 2.02%. Despite this downturn, the company has reported impressive growth in net sales, with an annual increase of 135.95%, and operating profit rising by 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’s high Debt to EBITDA ratio of 9.32 times raises concerns about its ability to service debt, while a return on equity of 2.73% suggests low profitability. With domestic mutual funds holding no stake, the market sentiment appears cautious regarding Mercury EV-Tech's valuation and performance.