TIL Receives 'Sell' Rating from MarketsMOJO, Citing Weak Fundamentals and High Debt

TIL, a smallcap engineering company, has recently received a 'Sell' rating from MarketsMOJO on September 16, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the high debt of TIL, with a debt-equity ratio of 5.09 times. This indicates a low ability to service debt, as shown by the high debt to EBITDA ratio of 3.65 times. Additionally, the company has a low return on equity of 1.39%, which suggests low profitability per unit of shareholders' funds.

Another concerning factor is the negative EBITDA, which makes the stock risky compared to its historical valuations. While the stock has generated a return of 20.75% in the past year, its profits have only risen by 94%.

Moreover, the promoters of TIL have decreased their stake in the company by -8.48% over the previous quarter, currently holding 68.43% of the company. This decrease in stake may indicate a lack of confidence in the future of the business.

In the last year, TIL has underperformed the market, with a return of 20.75% compared to the market's (BSE 500) return of 34.97%.

However, there are some positive factors to consider. The company has shown a growth in net sales of 1835.84% and has declared positive results for the last two consecutive quarters. In addition, the PAT (HY) is higher at Rs 33.76 crore, and the net sales (Q) and PBDIT (Q) are at their highest at Rs 66.98 crore and Rs -4.74 crore, respectively.

From a technical standpoint, the stock is currently in a mildly bullish range, with multiple factors such as RSI, MACD, KST, and OBV indicating a bullish trend.

In conclusion, while TIL has shown positive results in the past, the high debt and decreasing promoter confidence make it a risky investment. Investors should carefully consider these factors before making any decisions regarding the stock.