Mauria Udyog downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and technical trends

Mauria Udyog, a microcap company in the capital goods industry, has recently been downgraded to a 'Sell' by MarketsMOJO on April 5, 2024. This decision was based on several factors, including the company's high debt-to-equity ratio of 7.25 times, indicating a weak long-term fundamental strength. Additionally, the company has shown poor long-term growth with a -24.54% annual growth rate in net sales over the last 5 years.
Furthermore, Mauria Udyog has a high debt-to-equity ratio of 2.79 times and a low return on equity of 5.57%, indicating low profitability per unit of shareholders' funds. The stock is currently in a mildly bearish range, with technical trends deteriorating since April 5, 2024, and generating a return of 8.15% since then. Multiple technical indicators, such as RSI, MACD, and KST, also suggest a bearish outlook for the stock.

However, the company has shown positive results in the last three consecutive quarters, with a growth in operating profit of 105.26% in December 2023. The company's PAT (HY) is also higher at Rs 7.12 crore, and its net sales (Q) and PBDIT (Q) are at their highest levels at Rs 84.17 crore and Rs 11.13 crore, respectively.

Despite these positive results, Mauria Udyog's ROCE is only 4.2, indicating a very attractive valuation with a 1.5 enterprise value to capital employed. The stock is currently trading at a discount compared to its average historical valuations, and its profits have risen by 235.3% in the past year, resulting in a PEG ratio of 0.1.

The majority shareholders of Mauria Udyog are the promoters, and the company has consistently outperformed BSE 500 in the last three annual periods, generating a return of 129.11% in the past year. However, MarketsMOJO's downgrade to 'Sell' suggests caution for potential investors in Mauria Udyog.