COSYN downgraded to 'Sell' by MarketsMOJO due to weak financial performance

COSYN, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on June 24, 2024. This decision was based on weak long-term fundamental strength, poor debt servicing ability, and low profitability per unit of shareholders' funds.
Over the past 5 years, COSYN has seen a -34.27% CAGR growth in operating profits, indicating a decline in its financial performance. Additionally, the company's EBIT to Interest ratio of 0.10 suggests that it may struggle to meet its debt obligations. Furthermore, with a Return on Equity (ROE) of only 1.83%, the company's profitability is relatively low.

In terms of valuation, COSYN is currently trading at a premium with a price to book value of 1.1, which is higher than its historical average. Despite generating a return of 14.01% in the past year, the company's profits have fallen by -22%, indicating a decline in its financial performance.

Moreover, COSYN has underperformed the market in the last year, with a return of 14.01% compared to the market's (BSE 500) return of 38.50%. However, the company has shown positive results in the March 2024 quarter, with its PBDIT, PBT LESS OI, and PAT reaching their highest levels.

From a technical standpoint, the stock is currently in a mildly bullish range, with indicators such as MACD, KST, and OBV showing positive trends. It is worth noting that the majority of shareholders in COSYN are promoters.

In conclusion, based on the recent downgrade by MarketsMOJO and the company's weak financial performance, it may be wise for investors to consider selling their stocks in COSYN. However, it is important to keep an eye on the company's future performance and any potential positive developments.