Fredun Pharmaceuticals Downgraded to 'Sell' by MarketsMOJO, Showing Flat Results and Increased Interest Expenses

Fredun Pharmaceuticals, a microcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on June 26, 2024. This downgrade is based on the company's flat results in March 2024, with a decrease of 27.09% in PBT LESS OI(Q) at Rs 5.84 crore and a lowest OPERATING PROFIT TO INTEREST (Q) at 2.56 times. Additionally, the company's interest expenses have also increased, reaching a high of Rs 4.37 crore.
Technically, the stock is currently in a Mildly Bearish range, with a deteriorating trend since June 24, 2024, resulting in a -1.78% return. The key technical factor, KST, has also been Bearish since June 24, 2024.

In the past year, Fredun Pharmaceuticals has underperformed the market, generating a return of only 6.41%, compared to the market's (BSE 500) return of 38.95%. However, the company has shown healthy long-term growth, with an annual growth rate of 29.08% in Net Sales and 43.06% in Operating profit.

The company also has an attractive valuation, with a ROCE of 15.3 and a 2.8 Enterprise value to Capital Employed. Currently, the stock is trading at a discount compared to its average historical valuations. Despite the lower returns in the past year, the company's profits have increased by 36.5%, resulting in a PEG ratio of 0.8.

In conclusion, while Fredun Pharmaceuticals may have shown strong long-term growth and attractive valuations, the recent downgrade by MarketsMOJO and underperformance in the market may be a cause for concern for potential investors. It is important to carefully consider all factors before making any investment decisions.