Som Distilleries & Breweries downgraded to 'Hold' by MarketsMOJO, concerns over debt and market underperformance

Som Distilleries & Breweries, a smallcap company in the breweries industry, has recently been downgraded to a 'Hold' by MarketsMOJO on June 18, 2024. This decision was based on the company's current performance and future potential.
Despite a healthy long-term growth rate of 26.63% in Net Sales, the company's technical trend is currently sideways, indicating no clear price momentum. In addition, the technical trend has deteriorated from mildly bullish to -6.37% returns since June 18, 2024.

On a positive note, the company has declared positive results for the last 9 consecutive quarters, with a growth in Operating Profit of 59.42% in March 2024. The company's ROCE (HY) is also at a high of 18.37%, and its net sales and PBT less OI have grown at 51.09% and 63.88%, respectively.

However, the company's ability to service debt is a concern, with a high Debt to EBITDA ratio of 4.63 times. This may affect the company's profitability and ability to generate returns for shareholders. In addition, the company has underperformed the market in the last year, with a return of 18.77% compared to the market's return of 37.27%.

Despite these challenges, promoters have shown confidence in the company by increasing their stake by 0.53% in the previous quarter, currently holding 35.26% of the company. This could be a positive sign for the future of the business.

Overall, Som Distilleries & Breweries has a very attractive valuation with a 3.4 Enterprise value to Capital Employed and a PEG ratio of 0.7. However, the company's high debt and underperformance in the market may be a cause for concern for potential investors.