SAL Automotive Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Negative Results

SAL Automotive, a microcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on June 6, 2024. This decision was based on the company's poor long-term growth, as its operating profit has only grown at an annual rate of 14.60% over the last 5 years. Additionally, SAL Automotive declared negative results in March 2024 after 7 consecutive positive quarters, with a decrease of 48.45% in its PAT (HY) and the lowest net sales of Rs 60.78 crore.
Furthermore, the company has underperformed the market in the last year, with a return of only 18.93% compared to the market's return of 33.87% (BSE 500). The technical trend for SAL Automotive is currently sideways, indicating no clear price momentum, and has deteriorated from bullish to -12.41% returns since February 15, 2024.

On a positive note, SAL Automotive has an attractive valuation with a ROCE of 13.9 and a 2.4 enterprise value to capital employed. The stock is also trading at a discount compared to its average historical valuations. However, its profits have only risen by 8.5% in the past year, resulting in a PEG ratio of 2.8.

It is worth noting that the majority shareholders of SAL Automotive are its promoters. While this may provide some stability, it is important to consider the company's overall performance and future prospects before making any investment decisions. With all these factors in mind, MarketsMOJO has downgraded SAL Automotive to a 'Sell' and investors should proceed with caution.