Konark Synthetic Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals and High Debt

Konark Synthetic, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on October 23, 2024. This downgrade is due to weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 0%. The company has also shown poor growth in the last 5 years, with a -12.29% annual growth rate in net sales and 0% in operating profit.
One of the major concerns for Konark Synthetic is its high debt, with a Debt to Equity ratio (avg) of 0 times. In the latest quarter, the company's net sales and operating profit were at their lowest, at Rs 5.02 crore and Rs 0.24 crore respectively. The operating profit to net sales ratio was also at its lowest at 4.78%.

However, there are some positive technical factors for the stock. It is currently in a mildly bullish range, and its MACD and KST technical factors are also bullish. With a ROCE of 3.9, the stock has a very attractive valuation with an enterprise value to capital employed ratio of 0.9. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

In the past year, Konark Synthetic has generated a return of 164.17%, while its profits have risen by 128.3%. The majority shareholders of the company are promoters, and it has shown market-beating performance in both the long term and near term. In fact, it has outperformed BSE 500 in the last 3 years, 1 year, and 3 months.

Overall, while Konark Synthetic may have some positive technical factors, its weak long-term fundamentals and high debt make it a risky investment. Investors should carefully consider these factors before making any decisions regarding this microcap company in the textile industry.