Unjha Formulations Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Expensive Valuation

Unjha Formulations, a microcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on July 1, 2024. This decision was based on the company's weak long-term fundamental strength, with a 2.11% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 0.20.
One of the main reasons for the downgrade is the company's expensive valuation, with a price to book value of 4.2 and a ROE of 9.9. This is significantly higher than its average historical valuations. Despite generating a return of 103.29% in the past year, the company's profits have actually fallen by -1%.

However, there are some positive factors to consider. Unjha Formulations has shown positive results in March 2024, with a 64.96% growth in net sales and a higher PAT of Rs 0.21 crore. The stock is also technically in a mildly bullish range, with its MACD and KST technical factors also being bullish.

It is worth noting that the majority of the company's shareholders are non-institutional investors. This could potentially lead to higher volatility in the stock price. On the other hand, Unjha Formulations has a track record of market-beating performance in the long term as well as the near term. In the last 3 years, 1 year, and 3 months, the stock has outperformed BSE 500.

In conclusion, while Unjha Formulations may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO highlights some concerns about the company's financial health and valuation. Investors should carefully consider these factors before making any investment decisions.