Cyient DLM Receives 'Sell' Rating from MarketsMOJO, Flat Results and Expensive Valuation Raise Concerns

Cyient DLM, a midcap company in the electronics-components industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's flat results in the June 2024 quarter, with a decrease of 30.3% in its PAT (Q) at Rs 10.67 crore. Additionally, its operating cash flow (Y) has also decreased significantly, reaching its lowest point at Rs -70.54 crore. The company's net sales (Q) have also fallen by 13.5% at Rs 257.89 crore.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 5.8 and a ROE of 6.7. This is significantly higher than its average historical valuations. Despite a 93% increase in profits over the past year, the stock has underperformed the market (BSE 500) and has generated negative returns of -1.32%.

On a positive note, Cyient DLM has a strong ability to service debt, with a low debt to EBITDA ratio of 1.07 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The stock has also underperformed since the downgrade, with a decrease of -2.61% since September 25, 2024.

It is worth noting that the company has a high institutional holding of 22.58%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals. Their stake in the company has also increased by 2.97% in the previous quarter.

In conclusion, while Cyient DLM may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO suggests caution for investors. The company's flat results and expensive valuation are major concerns, and the stock has underperformed the market in the past year.