Barak Valley Cements Receives 'Sell' Rating from MarketsMOJO, Despite Attractive Valuation and Promising Shareholder Returns

Barak Valley Cements, a microcap company in the cement industry, has recently received a 'Sell' rating from MarketsMOJO on September 4th, 2024. This downgrade is based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 7.33%, poor long-term growth with a -2.38% annual growth rate in net sales and 13.99% in operating profit over the last 5 years, and a high Debt to EBITDA ratio of 4.10 times, indicating a low ability to service debt.
In addition, the company's recent financial results for June 2024 have been flat, with a -55.95% growth in PAT (HY) at Rs 2.00 crore and a -8.5% decrease in net sales (Q) at Rs 53.54 crore. However, the stock is currently in a mildly bullish range and its MACD and KST technical factors are also bullish.

Despite these factors, the company has an attractive valuation with a ROCE of 10 and an enterprise value to capital employed ratio of 1.1. The stock is also trading at a discount compared to its historical valuations. However, its profits have only risen by 1.6% in the past year, resulting in a high PEG ratio of 12.5.

The majority shareholders of Barak Valley Cements are the promoters, and the company has consistently generated returns over the last 3 years. In fact, it has outperformed the BSE 500 in each of the last 3 annual periods, despite its recent downgrade. Investors should carefully consider these factors before making any decisions regarding this microcap cement company.