Amarjothi Spinning Mills Upgraded to 'Hold' by MarketsMOJO, Strong Debt Servicing and Attractive Valuation

Amarjothi Spinning Mills, a microcap textile company, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on the company's strong ability to service its debt, with a low Debt to EBITDA ratio of 1.12 times. Additionally, the stock is currently in a Mildly Bullish range and the technical trend has improved from Mildly Bearish on 21-Mar-24. A key technical factor, the Bollinger Band, has also been Bullish since 21 Mar 2024.
In terms of valuation, Amarjothi Spinning Mills has an attractive ROCE of 8.8 and a low Enterprise value to Capital Employed ratio of 0.7. The stock is currently trading at a discount compared to its average historical valuations. However, over the past year, the stock has generated a return of -0.20%, while its profits have fallen by -4.4%.

The majority shareholders of Amarjothi Spinning Mills are its promoters. However, the company has shown poor long-term growth with a decline in Net Sales by an annual rate of -0.44% and Operating profit at -3.76% over the last 5 years. In Dec 23, the company reported flat results with a 20.63% decline in Net Sales (9M).

In the last 1 year, Amarjothi Spinning Mills has underperformed the market (BSE 500) with negative returns of -0.20%, while the market has generated returns of 37.25%. Despite this, the company's strong ability to service its debt and attractive valuation make it a 'Hold' for now.