MarketsMOJO downgrades Asian Hotels (East) to 'Sell' due to bearish trend and underperformance

Asian Hotels (East) is a microcap company in the hotel industry. Recently, MarketsMOJO downgraded their stock call to 'Sell' on June 5th, 2024. This is due to the stock being in a bearish range and the technical trend deteriorating from mildly bearish. Since then, the stock has only generated a return of 3.2%. Multiple factors such as MACD, Bollinger Band, and KST also indicate a bearish outlook for the stock.
In the past year, Asian Hotels (East) has underperformed the market with a return of only 16.09%, compared to the market's return of 32.10%. However, the company has a low debt to equity ratio and has shown healthy long-term growth with an annual rate of 173.31% in operating profit.

After two consecutive negative quarters, the company has declared positive results in March 2024. Their net sales and PBDIT have reached their highest at Rs 33.61 crore and Rs 13.22 crore respectively. The operating profit to net sales ratio is also at its highest at 39.33%.

With a ROCE of 4.8, Asian Hotels (East) has a very attractive valuation with a 1 enterprise value to capital employed. The stock is currently trading at a discount compared to its average historical valuations. Despite the lower return in the past year, the company's profits have risen by 63.3%, resulting in a low PEG ratio of 0.2.

It is worth noting that the majority shareholders of Asian Hotels (East) are the promoters themselves. This may indicate a lack of interest from external investors. Overall, while the company has shown positive growth and has a low debt to equity ratio, the current bearish trend and underperformance in the market may make it a less attractive investment option.