National Plastic Industries Receives 'Sell' Rating from MarketsMOJO Due to Weak Long-Term Performance.

National Plastic Industries, a microcap company in the plastic products industry, has recently received a 'Sell' rating from MarketsMOJO on September 17, 2024. This downgrade is based on several factors that indicate weak long-term performance for the company.
One of the main reasons for the 'Sell' rating is the company's weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of only 7.11%. This is significantly lower than the industry average and suggests that the company is not utilizing its capital efficiently.

In addition, National Plastic Industries has shown poor long-term growth, with a negative annual growth rate of -2.17% in Net Sales and only 4.92% in Operating Profit over the last 5 years. This indicates a lack of growth potential for the company.

Furthermore, the company has a high Debt to EBITDA ratio of 5.42 times, which suggests a low ability to service its debt. This can be a cause for concern for investors, as it may lead to financial instability in the future.

In the latest quarter, the company's results have been flat, with a decline of -72.85% in PAT (9M) and the lowest PBDIT (Q) at Rs 1.51 crore. The Operating Profit to Net Sales (Q) is also at its lowest at 6.21%. These numbers further support the 'Sell' rating for National Plastic Industries.

Moreover, the stock has underperformed the market in the last 1 year, generating a return of only 17.99% compared to the market's return of 34.98% (BSE 500). This indicates that the company's stock is not performing well in the market.

On a technical level, the stock is currently in a Mildly Bullish range, with its MACD and KST technical factors also showing a Bullish trend. However, these technical factors do not outweigh the weak fundamental performance of the company.

Despite its current low valuation with an ROCE of 13.7 and a 1.4 Enterprise value to Capital Employed, the stock is still trading at a discount compared to its average historical valuations. This suggests that the market is not confident in the company's future performance.

It is also worth noting that the majority shareholders of National Plastic Industries are the promoters, which may raise concerns about the company's corporate governance.

In conclusion, based on the weak long-term fundamental performance, underperformance in the market, and high debt levels, it is advisable for investors to consider the 'Sell' rating on National Plastic Industries by MarketsMOJO.