Cupid Receives 'Hold' Rating Despite Strong Growth in Net Profit and Sales

Cupid, a smallcap company in the rubber products industry, has recently received a 'Hold' rating from MarketsMOJO on April 15, 2024. This downgrade is due to the company's low Debt to Equity ratio, which is currently at 0 times.
Despite this, Cupid has shown strong growth in its net profit, with a 167.72% increase in the last quarter. The company's net sales have also seen a significant growth of 64.2%, with the highest PBDIT (Profit Before Depreciation, Interest, and Taxes) at Rs 30.91 crore. Additionally, the operating profit to net sales ratio is at its highest at 49.14%.

Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Cupid has also outperformed the BSE 500 index in the long term, generating a return of 819.08% in the last year.

However, the company's long term growth has been poor, with an annual growth rate of only 9.71% in operating profit over the last 5 years. This, coupled with a high ROE of 23.8 and a price to book value of 19.6, indicates a very expensive valuation for the stock. In fact, the stock is currently trading at a premium compared to its historical valuations.

Moreover, 56.24% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. This proportion of pledged holdings has also increased by 56.24% in the last quarter.

In conclusion, while Cupid has shown strong growth in its net profit and net sales, its high valuation and significant percentage of pledged promoter shares make it a 'Hold' for now. Investors should keep an eye on the company's future performance and monitor any changes in its debt to equity ratio.