MarketsMOJO Downgrades Smruthi Organics to 'Sell' Due to Flat Results and Low Debtors Turnover Ratio

Smruthi Organics, a microcap pharmaceutical company, has recently received a 'Sell' rating from MarketsMOJO on July 10, 2024. This downgrade is based on the company's flat results in the March 2024 quarter, with a decrease of -65.33% in its PAT (9M) at Rs 1.30 crore. Additionally, the company's Debtors Turnover Ratio (HY) is at its lowest at 3.11 times.
Despite these negative factors, Smruthi Organics has shown high management efficiency with a ROE of 17.72%. It also has a strong ability to service debt, with a low Debt to EBITDA ratio of 0.58 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. Although the trend has improved since June 28, 2024, with a 0.31% return, it is still not enough to outweigh the other negative factors.

Furthermore, the company's ROCE of 7.8 suggests a fair valuation with a 2.5 Enterprise value to Capital Employed. However, the stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of 28.72% in the past year, Smruthi Organics' profits have fallen by -11.4%.

It is worth noting that the majority shareholders of Smruthi Organics are its promoters. This could potentially raise concerns about the company's future growth and profitability. Overall, based on the current financial and technical indicators, MarketsMOJO has downgraded its stock call on Smruthi Organics to 'Sell'. Investors should carefully consider these factors before making any investment decisions.