East West Holdings Downgraded to 'Sell' by MarketsMOJO, But Still Shows Positive Results and Strong Valuation

East West Holdings, a microcap company in the miscellaneous industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 22, 2024. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 6.85% and a high Debt to EBITDA ratio of 6.04 times, indicating a low ability to service debt.
Technically, the stock is currently in a Mildly Bearish range, with the trend deteriorating from Mildly Bullish on July 22, 2024, resulting in a -3.7% return since then. The key technical factor, RSI, has also been Bearish since July 22, 2024.

In addition, there has been a decrease in institutional investor participation, with a -3.63% decrease in stake over the previous quarter. Currently, institutional investors hold only 0.06% of the company, indicating their lack of confidence in the company's fundamentals.

However, the company did declare positive results in March 2024 after flat results in December 2023. The ROCE (HY) was at its highest at 15.66%, while PBDIT (Q) and PAT (Q) were also at their highest at Rs 3.56 crore and Rs 6.04 crore, respectively.

Despite the recent downgrade, East West Holdings still has a Very Attractive valuation with a ROCE of 9.1 and a 1.1 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 40.09%, while its profits have risen by 604.8%, resulting in a PEG ratio of 0.

Overall, while the recent downgrade may raise concerns, it is important to note that the company has shown positive results in the past and has a strong valuation. Investors should carefully consider all factors before making any investment decisions.