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

Vivid Global Industries, a microcap company in the chemicals industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 14, 2024. This decision was based on the company's weak long-term fundamental strength, with a -30.15% 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 1.43.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a ROE of 3.8 and a price to book value of 1.3. This is significantly higher than its average historical valuations. Furthermore, while the stock has generated a return of 2.07% in the past year, its profits have only risen by 88%, resulting in a low PEG ratio of 0.1.

In terms of performance, Vivid Global Industries has underperformed the market in the last year, with a return of only 2.07% compared to the market's (BSE 500) return of 35.61%. This further supports the 'Sell' rating given by MarketsMOJO.

However, there are some positive factors to consider. The company reported positive results in June 2024, with a 27.35% growth in net sales and a higher PAT of Rs 0.15 cr. Additionally, the stock is currently in a mildly bullish range, with technical factors such as MACD and Bollinger Band also showing a bullish trend.

It is worth noting that the majority of shareholders in Vivid Global Industries are non-institutional investors. This could potentially lead to higher volatility in the stock price.

In conclusion, MarketsMOJO's downgrade of Vivid Global Industries to a 'Sell' is based on the company's weak long-term fundamentals and expensive valuation. While there are some positive factors to consider, investors should carefully evaluate their options before making any investment decisions.