Majestic Auto Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals

Majestic Auto, a microcap company in the miscellaneous industry, has recently received a 'Sell' rating from MarketsMOJO on August 1, 2024. 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 company's poor growth in operating profits over the last 5 years, with a CAGR of -9.75%. Additionally, Majestic Auto's ability to service its debt is weak, as shown by a low EBIT to Interest ratio of 1.86. This signifies that the company may struggle to meet its financial obligations.

Furthermore, the company's profitability per unit of shareholders' funds is low, with a Return on Equity of 3.84%. This, combined with a high valuation of 5.2 times its book value, makes the stock very expensive.

On a positive note, Majestic Auto has shown strong growth in operating profits of 131.32% in the last quarter, indicating a positive trend. The company has also declared positive results for the last 3 consecutive quarters, with a significant growth in profits and sales.

From a technical standpoint, the stock is currently in a mildly bullish range, with both MACD and KST technical factors showing a bullish trend. However, the majority of shareholders in the company are promoters, which may raise concerns for potential investors.

In terms of performance, Majestic Auto has outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of 106.15% in the last year alone. However, it is important to note that this high return is not reflected in the company's profits, with a PEG ratio of 0.

In conclusion, while Majestic Auto has shown some positive growth in recent quarters, the overall weak fundamental strength and expensive valuation make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.