MarketsMOJO Downgrades Mawana Sugars to 'Sell' Due to Poor Financials and Bearish Indicators

Mawana Sugars, a microcap company in the sugar industry, has recently been downgraded to a 'Sell' by MarketsMOJO on May 27, 2024. This decision was based on several factors, including the company's low ability to service debt with a high Debt to EBITDA ratio of 0 times. Additionally, the company has shown poor long-term growth with a net sales increase of only 2.83% over the last 5 years.
Technically, the stock is currently in a Mildly Bearish range, with multiple indicators such as MACD, KST, DOW, and OBV showing bearish signals. In the past year, the stock has underperformed the market, generating a return of only 12.17% compared to the market's return of 35.99% (BSE 500).

However, there are some positive factors to consider. The company has shown healthy long-term growth with an annual rate of 34.99% in operating profit. In the latest quarter, Mawana Sugars has also reported positive results, with PBT LESS OI(Q) at Rs 62.17 crore, growing at 755.7%, and PAT(Q) at Rs 47.08 crore, growing at 336.8%. The PBDIT(Q) is also at its highest at Rs 81.40 crore.

Moreover, with a ROCE of 6.8, the company has a very attractive valuation with a 1.1 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 12.17%, its profits have risen by 1109.6%, resulting in a PEG ratio of 0.

It is worth noting that the majority shareholders of Mawana Sugars are the promoters themselves. This may indicate their confidence in the company's future prospects. However, considering the current financial situation and market performance, MarketsMOJO has downgraded the stock to a 'Sell' and advises investors to proceed with caution.