Incredible Industries Receives 'Sell' Rating Due to Weak Financial Performance and High Pledged Shares

Incredible Industries, a microcap company in the steel/sponge iron/pig iron industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, poor ability to service its debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the 'Sell' rating is the company's -10.78% CAGR growth in operating profits over the last 5 years. This indicates a decline in the company's financial performance. Additionally, the company's EBIT to Interest ratio of 1.83 is also a cause for concern, as it suggests a weak ability to cover its interest expenses.

In terms of recent financial results, Incredible Industries saw a decline in net sales of -10.6% in the quarter ending June 2024. This could be a red flag for investors, as it shows a decrease in the company's revenue.

Another concerning factor is that 68.03% of the company's promoter shares are pledged. In a falling market, this can put additional downward pressure on the stock prices.

On a positive note, the stock is currently in a mildly bullish range and its MACD and KST technical factors are also bullish. However, with a ROCE of 8.3, the stock is considered to have an attractive valuation with a 1.5 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations.

In terms of performance, Incredible Industries has outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. However, it is important to note that while the stock has generated a return of 59.50% in the last year, its profits have only risen by 5.2%. This gives the company a high PEG ratio of 6.7, which may be a cause for concern for investors.

In conclusion, while Incredible Industries has shown market-beating performance in the long term, its recent financial results and high promoter pledged shares may be a cause for concern. Investors should carefully consider these factors before making any investment decisions.