Snowman Logistics Receives 'Sell' Rating Due to Weak Debt Servicing Ability

Snowman Logistics, a smallcap logistics company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is due to the company's weak ability to service its debt, with a poor EBIT to Interest (avg) ratio of 1.16. Additionally, the company's Return on Equity (avg) is at a low 1.16%, indicating low profitability per unit of shareholders' funds.
In the latest quarter, Snowman Logistics reported negative results with a significant decrease in profits. The company's PAT(Q) has fallen by -79.2% and its OPERATING PROFIT TO INTEREST (Q) is at its lowest at 3.48 times. Similarly, PBDIT(Q) is also at its lowest at Rs 22.04 cr.

However, there are some positive factors to consider. Snowman Logistics has shown healthy long-term growth with an annual rate of 52.09% in operating profit. The technical trend for the stock is currently sideways, indicating no clear price momentum. But, it has generated a return of 1.92% since the technical trend deteriorated from Mildly Bullish on 13-Nov-24.

With a ROCE of 5.1, Snowman Logistics has an attractive valuation with a 2 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. However, while the stock has generated a return of 19.05% in the past year, its profits have fallen by -41.9%.

On a positive note, promoter confidence in Snowman Logistics is rising. Promoters have increased their stake in the company by 1.19% in the previous quarter and currently hold 46.43% of the company. This increase in stake is a sign of high confidence in the future of the business.

In conclusion, while Snowman Logistics may have some challenges to overcome, it also has potential for growth and a strong backing from its promoters. Investors should carefully consider all factors before making any decisions regarding this stock.