DCM Shriram Upgraded to 'Hold' by MarketsMOJO, Despite Challenges and Underperformance

DCM Shriram, a midcap diversified company, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on various factors, including the company's strong ability to service debt with a low Debt to EBITDA ratio of 0.53 times. Additionally, the stock is currently in a bullish range and has shown improvement in its technical trend.
However, the company has faced challenges in terms of long-term growth, with its operating profit growing at a negative annual rate of -9.00% over the last 5 years. In the recent quarter, DCM Shriram reported negative results, with its operating cash flow at its lowest and its return on capital employed also declining.

With a ROCE of 8.6, the stock is currently trading at an expensive valuation with a 2.4 Enterprise value to Capital Employed. However, it is worth noting that 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 11.60%, its profits have fallen by -31.2%.

It is also interesting to note that despite its size, domestic mutual funds hold only 0.85% of the company. This could signify that they are either not comfortable with the current price or the business itself. Furthermore, DCM Shriram has underperformed the market in the last 1 year, with a return of 11.60% compared to the market's (BSE 500) return of 35.33%.

In conclusion, while DCM Shriram has shown some positive signs, it is important to consider the company's challenges and underperformance in the market before making any investment decisions.