Bedmutha Industries Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals

Bedmutha Industries, a microcap company in the iron and steel industry, has recently been downgraded to a 'Sell' by MarketsMOJO on June 14, 2024. This decision was based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the downgrade is the company's average Return on Capital Employed (ROCE) of 0%, which is a key indicator of a company's profitability. Additionally, Bedmutha Industries has shown poor long-term growth with only a 10.58% increase in Net Sales and 11.67% increase in Operating profit over the last 5 years.

Another concerning factor is the high debt-to-equity ratio of 3.08 times, which indicates a high level of debt for the company. This can be risky for investors, especially in falling markets.

Furthermore, the company's operating profits have been negative, making the stock even riskier. In the past year, while the stock has generated a return of 339.23%, its profits have only increased by 61.1%. This has resulted in a PEG ratio of 0.7, which is below the industry average.

Moreover, 95.06% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in a falling market.

On a positive note, Bedmutha Industries has declared very positive results in March 2024 with a growth in net profit of 65.61%. The company has also shown positive results for the last 3 consecutive quarters, with the highest ROCE and lowest debt-to-equity ratio in the last half-year. Additionally, the company's net sales for the last quarter were the highest at Rs 229.46 crore.

Technically, the stock is currently in a mildly bullish range with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

However, despite its recent market-beating performance, with 339.23% returns in the last year and outperforming BSE 500 in the last 3 years, 1 year, and 3 months, the overall outlook for Bedmutha Industries remains negative. Investors should carefully consider these factors before making any investment decisions.