Steel Strips Wheels Downgraded to 'Sell' by MarketsMOJO, High Debt and Poor Growth Factors

Steel Strips Wheels, a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on April 3, 2024. This decision was based on several factors, including the company's high debt to EBITDA ratio of 2.82 times, indicating a low ability to service debt. Additionally, the company has shown poor long-term growth with an annual operating profit growth rate of only 19.67% over the last 5 years.
Furthermore, the company's results for December 2023 were flat, with the lowest operating profit to interest ratio of 4.65 times. Technically, the stock is currently in a Mildly Bearish range, with its technical trend deteriorating from Mildly Bullish on April 3, 2024. Since then, the stock has only generated a return of 2.36%. The MACD and KST technical factors also indicate a Bearish trend.

However, there are some positive aspects to consider. With a ROCE of 18.2, the company has an attractive valuation with a 2.3 Enterprise value to Capital Employed. The stock is also currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 56.48%, while its profits have risen by 5.9%. However, the PEG ratio of the company is 3.3, indicating a potential overvaluation.

Institutional investors have also shown an increasing interest in the company, with a 0.6% increase in their stake over the previous quarter. These investors have better resources and capabilities to analyze the fundamentals of companies, making their participation a positive sign.

Despite the recent downgrade, Steel Strips Wheels has shown a market-beating performance with a return of 56.48% in the last year, outperforming the market (BSE 500) returns of 40.22%. However, investors should carefully consider all factors before making any investment decisions.