MarketsMOJO Downgrades Kabsons Industries to 'Sell' Due to Weak Fundamentals and Expensive Valuation

Kabsons Industries, a microcap company in the industrial gases and fuels industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 21, 2024. This decision was based on the company's weak long-term fundamental strength, with a -13.30% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 0.49.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 5.9 and a ROE of 20.8. This is significantly higher than its average historical valuations. Furthermore, while the stock has generated a return of 198.58% in the past year, its profits have only risen by 51.5%, resulting in a PEG ratio of 0.5.

Other factors that contribute to the 'Sell' rating include the company's majority shareholders being promoters and its stock being in a mildly bullish range. However, the company has declared positive results for the last 8 consecutive quarters, with higher net sales of Rs 24.67 crore in the last 9 months. Additionally, the stock's MACD and KST technical factors are also bullish.

Despite its market-beating performance in the long term and near term, with outperforming BSE 500 in the last 3 years, 1 year, and 3 months, MarketsMOJO has deemed Kabsons Industries as a 'Sell' due to its weak fundamental strength and expensive valuation. Investors should carefully consider these factors before making any investment decisions.