Interglobe Aviation Receives 'Sell' Rating Due to Weak Fundamentals and High Debt

Interglobe Aviation, the parent company of India's largest airline IndiGo, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the high debt of Interglobe Aviation, with a debt-equity ratio of 9.51 times. This indicates a low ability to service debt and can be a cause for concern for investors. Additionally, the company has shown poor long-term growth, with operating profit growing at an annual rate of 0% over the last 5 years.

Another factor contributing to the downgrade is the decreasing stake of promoters in the company. In the previous quarter, promoters decreased their stake by -2%, which could signify a lack of confidence in the future of the business.

However, there are some positive aspects to consider. Interglobe Aviation has declared positive results for the last 7 consecutive quarters, with a high ROCE (return on capital employed) of 22.93%. The company also has a high inventory turnover ratio and a higher PAT (profit after tax) of Rs 7,621.72 Cr.

From a technical standpoint, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. The stock also has a fair valuation with a ROCE of 47.1 and is trading at a discount compared to its historical valuations.

In the past year, Interglobe Aviation has generated a return of 79.24%, outperforming the BSE 500 index. This market-beating performance has been consistent in the long term as well, making it an attractive option for investors.

Overall, while the 'Sell' rating may raise some concerns, it is important to consider all factors before making any investment decisions. With a strong market performance and positive financial results, Interglobe Aviation may still hold potential for investors.