Elgi Equipments Receives 'Hold' Rating from MarketsMOJO for Strong Management and Technical Factors

Elgi Equipments, a leading company in the compressors and pumps industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as a result of the company's high management efficiency, with a ROCE of 15.14%, and its strong ability to service debt, with a low Debt to EBITDA ratio of 1.03 times.
Technically, the stock is currently in a Mildly Bullish range, with a positive trend since 29-Oct-24 and a 10.7% return since then. The key technical factor, OBV, has also been Bullish since 29 Oct 2024.

One of the reasons for this upgrade is the high institutional holdings at 34.45%. These investors have better capability and resources to analyze fundamentals of companies than most retail investors. With a market cap of Rs 19,189 cr, Elgi Equipments is the biggest company in the sector and constitutes 25.04% of the entire sector. Its annual sales of Rs 3,294.95 are 21.13% of the industry.

However, the company has shown poor long-term growth, with net sales growing at an annual rate of 11.45% over the last 5 years. In addition, the results for Jun 24 were flat, with PAT(HY) at Rs 149.08 cr growing at -35.35% and INTEREST(HY) at Rs 18.17 cr growing at 20.49%. The DEBTORS TURNOVER RATIO(HY) is also at its lowest at 5.34 times.

With a ROE of 19.4, Elgi Equipments has a very expensive valuation with a 13.1 Price to Book Value. However, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 31.39%, its profits have fallen by -15.3%. Based on these factors, MarketsMOJO has upgraded the stock to a 'Hold' rating.