Beryl Drugs Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt

Beryl Drugs, a microcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on April 22, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor growth in net sales and operating profit, and a high debt to EBITDA ratio.
In the last five years, Beryl Drugs has only seen an average Return on Capital Employed (ROCE) of 5.27%, indicating a weak long-term fundamental strength. Additionally, the company's net sales have only grown at an annual rate of 14.92%, while operating profit has remained at a low 0.44%. This lack of growth potential is a major concern for investors.

Furthermore, Beryl Drugs has a high debt to EBITDA ratio of 3.04 times, which means the company may struggle to service its debt. This is a red flag for investors, as it could lead to financial instability in the future.

In terms of recent performance, Beryl Drugs saw flat results in December 2023, with a decrease of 6.47% in net sales. However, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

Despite these positive technical indicators, the stock is still trading at a discount compared to its average historical valuations. With an ROCE of 14 and an attractive valuation of 1.6 Enterprise value to Capital Employed, Beryl Drugs may seem like a good investment opportunity. However, it is important to note that the majority of shareholders are non-institutional, which could lead to volatility in the stock price.

In the last three years, Beryl Drugs has consistently outperformed the BSE 500, generating a return of 170.63%. However, its profits have only increased by 94%, resulting in a PEG ratio of 0. This indicates that the stock may be overvalued, and investors should approach with caution.

In conclusion, while Beryl Drugs may have shown strong returns in the past, the current downgrading to a 'Sell' by MarketsMOJO and the company's weak long-term fundamental strength and high debt to EBITDA ratio should be taken into consideration before making any investment decisions.