MarketsMOJO Downgrades Visco Trade Associates to 'Sell' Due to Poor Performance and High Debt

Visco Trade Associates, a microcap trading company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 18, 2024. This decision was based on several factors that indicate a poor performance and low profitability for the company.
One of the main reasons for the downgrade is the company's poor management efficiency, with a low Return on Capital Employed (ROCE) of 1.37%. This signifies a low profitability per unit of total capital, including equity and debt. Additionally, the company has a high Debt to EBITDA ratio of 4.19 times, indicating a low ability to service debt.

In terms of financial results, the company has shown flat results in September 2024, with the lowest net sales of Rs 22.54 crore and the lowest debtors turnover ratio of 0.00 times. The interest expense for the quarter was also the highest at Rs 2.00 crore.

From a technical standpoint, the stock is currently in a Mildly Bearish range, with the technical trend deteriorating from Sideways on November 13, 2024. The Bollinger Band, a key technical factor, has also been Bearish since November 13, 2024.

Furthermore, the stock has underperformed the market in the last year, with negative returns of -26.85% compared to the market's 23.90% returns. This indicates a significant underperformance by the company.

On a positive note, the company has shown healthy long-term growth, with an annual growth rate of 47.55% in net sales and 134.71% in operating profit. It also has a very attractive valuation with a ROCE of 27.1 and an Enterprise value to Capital Employed ratio of 1.5. However, these factors were not enough to outweigh the negative aspects of the company's performance.

It is also worth noting that the majority shareholders of Visco Trade Associates are the promoters, which may raise concerns about potential conflicts of interest.

In conclusion, based on the current information and performance of the company, it is recommended to sell the stock of Visco Trade Associates. Investors should carefully consider all the factors before making any investment decisions.