Shree Cement Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Expensive Valuation

Shree Cement, a leading player in the cement industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 19, 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 -0.10% over the last 5 years.

In addition, the company has recently declared negative results in June 2024, after 3 consecutive positive quarters. Its PAT (Q) has fallen by -51.3%, while its operating profit to net sales (Q) is at its lowest at 18.09%. The PBT less OI (Q) is also at its lowest at Rs 166.72 crore.

Furthermore, with a ROE of 11.6, the company's valuation is considered to be very expensive with a price to book value of 4.3. However, the stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 5.48%, its profits have only risen by 34.4%, resulting in a PEG ratio of 1.2.

In terms of performance, Shree Cement has underperformed the market in the last year, with a return of only 5.48%, compared to the market (BSE 500) returns of 37.46%.

Other factors to consider include the company's low debt to equity ratio (avg) of 0.02 times, indicating a strong financial position. However, the technical trend for the stock is currently sideways, with no clear price momentum. The trend has deteriorated from mildly bullish on August 19, 2024, and has only generated a return of 0.63% since then.

It is also worth noting that the company has a high institutional holding of 24.87%. These investors have better capability and resources to analyze the fundamentals of companies, making their decision to sell the stock a significant factor to consider.

In conclusion, while Shree Cement may have a strong financial position and a high institutional holding, its poor long-term growth and expensive valuation make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.