Bhagwati Autocast Downgraded to 'Sell' by MarketsMOJO Due to Negative Results and Low Debt Servicing Ability

Bhagwati Autocast, a microcap company in the castings/forgings industry, has recently been downgraded to a 'Sell' by MarketsMOJO on March 11, 2024. This decision was based on the company's negative results in December 2023, with a -47.91% growth in PAT (9M) and the lowest NET SALES(Q) and PBDIT(Q) at Rs 24.40 cr and Rs 0.28 cr respectively.
One of the factors contributing to this downgrade is the company's low ability to service debt, with a Debt to EBITDA ratio of 1.45 times. However, Bhagwati Autocast has shown a healthy long-term growth with an annual rate of 40.35% in Operating profit. The technical trend for the stock is currently sideways, indicating no clear price momentum. It has also generated -2.89% returns since the downgrade on March 11, 2024.

Despite the recent downgrade, Bhagwati Autocast has an attractive valuation with a ROCE of 28.3 and a 3 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. However, it is important to note that while the stock has generated a return of 66.12% in the past year, its profits have fallen by -11.2%.

The majority shareholders of Bhagwati Autocast are the promoters, indicating their confidence in the company's future. The company has also consistently generated returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. While the recent downgrade may raise concerns, it is important to consider the company's overall performance and potential for future growth.