Concord Drugs Downgraded to 'Sell' by MarketsMOJO, But Shows Potential for Undervaluation

Concord Drugs, a microcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on February 13, 2024. This decision was based on several factors, including weak long-term fundamental strength with a -4.38% CAGR growth in net sales over the last 5 years. Additionally, the company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of 1.55, and a low profitability per unit of shareholders funds with a Return on Equity (avg) of 2.66%.
In the latest quarter, the company's net sales were at their lowest at Rs 7.53 crore, indicating flat results. However, there are some bullish factors for the stock, such as being in a mildly bullish range and having multiple bullish indicators like MACD, Bollinger Band, and KST. With a ROCE of 7.6, the stock also has a very attractive valuation with a 1.2 Enterprise value to Capital Employed. Furthermore, it is currently trading at a discount compared to its average historical valuations.

In the past year, Concord Drugs has generated a return of 40.13%, while its profits have risen by 72%. This results in a PEG ratio of 0.5, indicating a potential undervaluation. The majority shareholders of the company are the promoters, which can be seen as a positive sign for investors.

Despite its recent downgrade, Concord Drugs has a track record of market-beating performance in the long term as well as the near term. In addition to its 40.13% return in the last year, the stock has also outperformed BSE 500 in the last 3 years, 1 year, and 3 months. While the future potential of the company is uncertain, investors should carefully consider the current financial health and performance of Concord Drugs before making any investment decisions.