Bhagwati Autocast Receives 'Sell' Rating After Negative Results, Raises Concerns for Investors

Bhagwati Autocast, a microcap company in the castings/forgings industry, has recently received a 'Sell' rating from MarketsMOJO on 2024-03-26. This downgrade is based on the company's negative results in December 2023, with a decline of -47.91% in PAT (9M) and the lowest NET SALES (Q) and PBDIT (Q) at Rs 24.40 crore and Rs 0.28 crore respectively.
Despite this, Bhagwati Autocast has shown a strong ability to service debt with a low Debt to EBITDA ratio of 1.45 times. Additionally, the company has a healthy long-term growth potential, with an annual growth rate of 40.35% in operating profit.

However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has also deteriorated from mildly bullish on 22-Mar-24, generating only 0.84% returns since then.

On the valuation front, Bhagwati Autocast seems to be attractive with a ROCE of 28.3 and a 3 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. However, despite generating a return of 58.04% in the past year, the company's profits have fallen by -11.2%.

It is worth noting that the majority shareholders of Bhagwati Autocast are the promoters themselves. This could potentially raise concerns about the company's corporate governance.

In terms of market performance, Bhagwati Autocast has outperformed the market (BSE 500) with a return of 58.04% in the last year, compared to the market's return of 39.26%. However, with the recent downgrade by MarketsMOJO, investors may want to carefully consider their investment in this microcap company in the castings/forgings industry.