Kopran Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Technical Deterioration

Kopran, a smallcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 14, 2024. This decision was based on the company's poor long-term growth, as its net sales have only grown at an annual rate of 10.80% and operating profit at 14.86% over the last 5 years. Additionally, the company has declared negative results in September 2024 after 4 consecutive positive quarters.
One of the key factors contributing to this downgrade is the company's low operating profit to interest ratio, which is currently at its lowest at 6.61 times. The company's profit after tax has also fallen by -46.4% to Rs 7.38 crore, and its profit before tax less operating income is at its lowest at Rs 8.64 crore.

Technically, the stock is currently in a mildly bearish range, with its technical trend deteriorating from mildly bullish on November 14, 2024. This has resulted in a -6.23% return since then. The Bollinger Band, a key technical factor, has also been bearish since November 14, 2024.

In terms of performance, the stock has underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, with a return of -1.42% in the last year. However, the company has a strong ability to service debt, with a low debt to EBITDA ratio of 1.16 times. It also has an attractive valuation with a ROCE of 10.7 and an enterprise value to capital employed ratio of 2.2.

Despite the recent downgrade, there are some positive factors to consider. The stock is currently trading at a discount compared to its average historical valuations, and its profits have risen by 164.5% in the past year, resulting in a PEG ratio of 0.1.

Moreover, institutional investors have increased their stake in the company by 0.73% over the previous quarter and collectively hold 1.54% of the company. This indicates that these investors have better capability and resources to analyze the company's fundamentals compared to most retail investors.

In conclusion, while Kopran's recent downgrade to 'Sell' may be a cause for concern, it is important to consider all factors before making any investment decisions. The company's performance has been below par in both the long-term and near-term, but it also has some positive aspects such as its ability to service debt and increasing participation by institutional investors. Investors should carefully evaluate all information before making any decisions regarding this stock.