Chartered Logistics downgraded to 'Sell' due to weak fundamentals and high debt

Chartered Logistics, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on the company's weak long-term fundamental strength, with a -21.38% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 9.61 times, indicating a low ability to service debt. Furthermore, the company has only been able to generate a return on equity of 0.05%, which suggests low profitability per unit of shareholders' funds.
While there have been some positive results for Chartered Logistics in the recent quarter, with higher PAT and net sales, the stock is currently in a mildly bullish range. Its technical factors, such as MACD and KST, are also showing a bullish trend. However, with a ROCE of 2.5, the stock is fairly valued with a 2 enterprise value to capital employed. It is also trading at a premium compared to its average historical valuations.

It is worth noting that the stock has performed well in the past year, generating a return of 110.89%, which is significantly higher than the market (BSE 500) returns of 40.49%. However, the profits of the company have only risen by 230%, resulting in a PEG ratio of 0. This suggests that the stock may be overvalued.

It is important to mention that the majority of shareholders in Chartered Logistics are non-institutional investors. This could potentially lead to higher volatility in the stock price.

In conclusion, while Chartered Logistics has shown some positive results in the recent quarter and has outperformed the market in the past year, its weak long-term fundamental strength and high debt to EBITDA ratio make it a risky investment. Investors should carefully consider these factors before making any investment decisions.