Tirupati Foam downgraded to 'Sell' by MarketsMOJO due to high debt and weak fundamentals

Tirupati Foam, a microcap company in the miscellaneous industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 10, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the last five years, the company has only seen a small annual growth rate of 1.63% in net sales and 1.03% in operating profit. Additionally, its ability to service its debt is weak with a poor EBIT to Interest ratio of 1.50.
In the most recent quarter, Tirupati Foam's net sales have fallen by 5.1% and its EPS is at its lowest at Rs 1.07. This has resulted in the company underperforming in the market, with a return of only 21.65% in the last year compared to the market's return of 34.61%.

However, there are some positive technical factors to consider. The stock is currently in a mildly bullish range and both its MACD and KST technical factors are bullish. Additionally, with a ROCE of 9.9, the stock has an attractive valuation with a 1.3 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations.

It is worth noting that the majority shareholders of Tirupati Foam are the promoters of the company. While the stock has generated a return of 21.65% in the last year, its profits have only risen by 10.1%, resulting in a PEG ratio of 2.5. Overall, MarketsMOJO's downgrade to 'Sell' for Tirupati Foam is based on the company's weak financial performance and high debt, making it a risky investment option.