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 November 18, 2024. This decision was based on several factors, including the company's high debt and weak long-term fundamental strength. Over the past 5 years, Tirupati Foam has only seen a 2.72% annual growth in net sales and a 1.03% growth in operating profit. Additionally, the company's ability to service its debt is weak with a poor EBIT to Interest ratio of 1.50.
In the latest quarter, Tirupati Foam's results were flat with the lowest net sales, PBDIT, and EPS at Rs 23.08 cr, Rs 2.07 cr, and Rs 1.02 respectively. However, there are some bullish factors for the stock, such as being in a mildly bullish range and having multiple bullish indicators like MACD, Bollinger Band, and KST. The company also has an attractive valuation with a ROCE of 10.1 and a 1.4 Enterprise value to Capital Employed.

Despite these positive aspects, the stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 50.83%, its profits have only risen by 6.2%, resulting in a high PEG ratio of 4.6. It is also worth noting that the majority shareholders of Tirupati Foam are the promoters.

However, Tirupati Foam has shown market-beating performance in the long term as well as the near term. Along with generating a 50.83% return in the last year, the stock has also outperformed BSE 500 in the last 3 years, 1 year, and 3 months. While the stock may have some bullish indicators, the overall weak fundamental strength and high debt make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any decisions regarding Tirupati Foam's stock.