Donear Industries Upgraded to 'Hold' by MarketsMOJO After Positive Quarter Results
Donear Industries, a microcap textile company, has recently been upgraded to a 'Hold' by MarketsMOJO on June 7, 2024. This upgrade comes after the company declared positive results in the March quarter, following two consecutive negative quarters. The company's operating profit to interest ratio is at a high of 4.32 times, with net sales and PBDIT also at their highest at Rs 242.60 crore and Rs 29.44 crore respectively.Technically, the stock is in a bullish range and the trend has improved from mildly bullish on June 7, 2024. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also bullish for the stock. However, with a ROCE of 3.4, the stock is fairly valued with an enterprise value to capital employed ratio of 1.8. It is currently trading at a discount compared to its average historical valuations.
Despite these positive aspects, Donear Industries is a high debt company with weak long-term fundamental strength. Its net sales and operating profit have only grown at an annual rate of 6.10% and 9.90% respectively over the last 5 years. The company also has a high debt to equity ratio of 2.34 times and a low return on capital employed of 8.66%.
It is worth noting that despite its size, domestic mutual funds hold only 0% of the company. This could signify that they are not comfortable with the stock's current price or the business itself. Additionally, Donear Industries has underperformed the market in the last 1 year, with a return of only 12.23% compared to the market's return of 35.28%.
In conclusion, while Donear Industries has shown positive results in the recent quarter and has a bullish technical trend, it is still a high debt company with weak long-term growth and low profitability. The lack of interest from domestic mutual funds and underperformance in the market also raise some concerns. Investors may want to hold off on investing in this microcap textile company until there is more stability and improvement in its financials.
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