Accel Receives 'Sell' Rating from MarketsMOJO Due to High Debt and Low Profitability

Accel, a microcap IT hardware company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on several factors, including the company's high debt to EBITDA ratio of 7.35 times, indicating a low ability to service debt. Additionally, the company's return on equity has been low at 2.34%, showing a lack of profitability per unit of shareholders' funds.
Technically, the stock is in a Mildly Bearish range and the trend has deteriorated from Sideways on 02-Sep-24. The Bollinger Band, a key technical factor, has been Bearish since 02 Sep 2024. Furthermore, Accel has underperformed the market in the last year, with a return of only 5.75% compared to the market's return of 38.49% (BSE 500).

However, there are some positive factors to consider. The company has shown healthy long-term growth, with net sales growing at an annual rate of 83.83% and operating profit at 43.50%. In Jun 24, the company also reported a higher PAT (HY) of Rs 2.20 crore. Additionally, with a ROCE of 7.8, Accel has an attractive valuation with a 1.5 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 5.75%, its profits have risen by 23.6%, resulting in a PEG ratio of 1.5.

It is worth noting that the majority shareholders of Accel are the promoters themselves. This could potentially impact the company's decision-making and future growth prospects. Overall, while Accel may have some positive aspects, the current financial and technical indicators suggest a 'Sell' rating for the stock. Investors should carefully consider these factors before making any investment decisions.