North Eastern Carrying Corporation Downgraded to 'Sell' by MarketsMOJO

North Eastern Carrying Corporation, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO on February 26, 2024. This downgrade is based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the 'Sell' rating is the company's weak net sales growth, with a -1.43% CAGR over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.93 times, indicating a low ability to service its debt. Furthermore, the company's return on equity (avg) is only 4.68%, which is considered low in terms of profitability.

In terms of recent performance, the company's results for December 2023 were flat. The company also has a high interest expense of Rs 2.57 crore, which could impact its profitability.

On a positive note, the stock is currently in a mildly bullish range and has multiple bullish indicators, such as MACD, Bollinger Band, KST, and OBV. Additionally, the company has a very attractive valuation with a ROCE of 7.3 and an enterprise value to capital employed ratio of 1.7. The stock is also trading at a discount compared to its average historical valuations.

However, it is important to note that while the stock has generated a return of 56.92% in the past year, its profits have only risen by 6.4%. This could be a cause for concern for potential investors.

It is also worth mentioning that the majority shareholders of North Eastern Carrying Corporation are the promoters. This could potentially impact the decision-making process and direction of the company.

Despite consistent returns over the last 3 years and outperforming the BSE 500 index, the recent downgrade by MarketsMOJO suggests caution for investors considering North Eastern Carrying Corporation. It is important to thoroughly research and analyze the company's financials and performance before making any investment decisions.