Tirupati Foam downgraded to 'Sell' by MarketsMOJO due to weak financials and underperformance

Tirupati Foam, a microcap company in the miscellaneous industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 26, 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 modest growth in net sales and operating profit, with a poor EBIT to Interest ratio of 1.50. Additionally, the company's return on equity has been low at 8.41%, indicating a lack of profitability per unit of shareholders' funds.
In the most recent quarter, Tirupati Foam's net sales have fallen by 5.1%, with the lowest EPS at Rs 1.07. This has resulted in the company underperforming in the market, with a return of 28.51% in the last year, compared to the market's return of 39.36%.

On a technical level, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. However, with a ROCE of 9.9, the stock is considered to have an attractive valuation, with an enterprise value to capital employed ratio of 1.2. It is also currently 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 seen a return of 28.51% in the last year, its profits have only risen by 10.1%, resulting in a PEG ratio of 2.3. Overall, MarketsMOJO's downgrade to 'Sell' for Tirupati Foam is based on the company's weak financial performance and underperformance in the market.