Damodar Industries Receives 'Hold' Rating from MarketsMOJO After Positive Results

Damodar Industries, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO on July 25, 2024. This upgrade comes after the company reported positive results in March 2024, with its operating profit to interest ratio reaching a high of 1.60 times and PBDIT at Rs 11.80 crore. Additionally, the operating profit to net sales ratio also reached a high of 6.59%.

Technically, the stock is currently in a mildly bullish range and has shown improvement from a mildly bearish trend on July 25, 2024. Multiple factors, such as MACD, Bollinger Band, KST, and OBV, indicate a bullish outlook for the stock.

Attractive valuation is another positive aspect of Damodar Industries, with a ROCE of 2.8 and an enterprise value to capital employed ratio of 1. The stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 9.13%, its profits have seen a significant increase of 487%, resulting in a PEG ratio of 0.

However, the company does have some weaknesses, such as high debt and weak long-term fundamental strength. Over the last 5 years, the operating profit has shown a negative annual growth rate of -11.85%, and the debt to equity ratio (avg) stands at 2.86 times. The return on equity (avg) is also low at 4.84%, indicating low profitability per unit of shareholders' funds.

Another concerning factor is that 30.09% of the promoter shares are pledged, which can put additional downward pressure on the stock prices during market downturns.

In the last 1 year, Damodar Industries has underperformed the market, with a return of 9.13% compared to the market (BSE 500) returns of 35.03%. While the company has shown positive results in the recent quarter, it is important to consider its high debt and weak long-term growth before making any investment decisions.