MarketsMOJO Downgrades Welspun Living to 'Sell' Due to Poor Growth and Reduced Promoter Confidence

Welspun Living, a midcap textile company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 18, 2024. This decision was based on several factors, including poor long-term growth, negative results in September 2024, and reducing promoter confidence.
According to MarketsMOJO, Welspun Living has shown a negative annual growth rate of -12.90% in operating profit over the last 5 years. In addition, the company's operating cash flow in September 2024 was at its lowest at Rs 532.84 Cr, and its debtors turnover ratio was also at its lowest at 6.92 times. Furthermore, the operating profit to interest ratio was also at its lowest at 6.52 times.

The decrease in promoter stake by -4.26% in the previous quarter also raises concerns about the company's future prospects. This could be seen as a lack of confidence in the business by the promoters.

In terms of performance, Welspun Living has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of -9.68%. The technical trend of the stock is currently sideways, indicating no clear price momentum. The stock has also generated a negative return of -1.14% since November 13, 2024, when it was rated as mildly bullish.

However, the company does have some positive aspects, such as an attractive valuation with a ROCE of 15.2 and a 2.5 enterprise value to capital employed. It is also trading at a discount compared to its historical valuations. In the past year, while the stock has generated a negative return, its profits have increased by 34.8%, resulting in a PEG ratio of 0.6.

In conclusion, based on the recent downgrade by MarketsMOJO and the various factors mentioned, it may be wise for investors to exercise caution when considering investing in Welspun Living.