Wheels India . Downgraded to 'Sell' by MarketsMOJO Due to Weak Financial Performance

Wheels India ., a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on the company's weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 8.43%. Additionally, the company has shown poor long-term growth, with net sales growing at an annual rate of 7.53% and operating profit at 0.92% over the last 5 years.
One of the major concerns for the company is its low ability to service debt, with a high Debt to EBITDA ratio of 3.70 times. This has resulted in below par performance in both the long-term and near-term, with the stock generating -2.17% returns in the last year and underperforming the BSE 500 index in the last 3 years, 1 year, and 3 months.

On a positive note, the company has shown promising results in June 2024, with PBT LESS OI(Q) growing at 82.9% and ROCE(HY) reaching its highest at 12.20%. The company also has a low DEBT-EQUITY RATIO(HY) of 0.93 times.

However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The stock's technical trend has deteriorated since 18-Sep-24, when it was mildly bullish, and has generated -2.46% returns since then.

Despite its current struggles, Wheels India . does have some attractive qualities. With an ROCE of 11.1, the company has an attractive valuation with a 1.6 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of -2.17%, its profits have risen by 38.1%, resulting in a PEG ratio of 0.7.

It is worth noting that the majority shareholders of Wheels India . are the promoters themselves. This could potentially lead to a conflict of interest and may be a factor to consider when making investment decisions. Overall, with its current downgrade to 'Sell' and various concerns surrounding its financial performance, investors may want to approach Wheels India . with caution.