Wheels India . Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Underperformance

Wheels India ., a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 4, 2024. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 8.43%, 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, and a high debt to EBITDA ratio of 3.70 times, indicating a low ability to service debt.
In addition, the stock has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a negative return of -7.39% in the last 1 year. The technical trend for the stock is currently sideways, indicating no clear price momentum, and has generated a negative return of -1.47% since October 4, 2024.

However, there have been some positive developments for Wheels India ., such as a growth of 82.9% in PBT LESS OI(Q) at Rs 29.49 crore in June 2024, the highest ROCE (12.20%) in the last half-year, and the lowest debt-to-equity ratio (0.93 times) in the same period. The stock also has a very attractive valuation with a ROCE of 11.1 and a 1.6 enterprise value to capital employed.

It is worth noting that while the stock has generated a negative return of -7.39% in the past year, its profits have actually increased by 38.1%. This has resulted in a PEG ratio of 0.7, indicating that the stock is trading at a discount compared to its average historical valuations.

The majority shareholders of Wheels India . are the promoters, which may provide some stability and confidence in the company's future performance. However, based on the current data and analysis, MarketsMOJO has downgraded the stock to a 'Sell' and investors may want to exercise caution before making any investment decisions.