Elpro International downgraded to 'Hold' by MarketsMOJO despite strong performance

Elpro International, a smallcap company in the construction and real estate industry, has recently been downgraded to a 'Hold' by MarketsMOJO on November 11, 2024. This decision was based on various factors, including the company's healthy long-term growth with an annual operating profit growth rate of 167.09%. Additionally, Elpro International declared very positive results in June 2024 with a growth in net profit of 97.83%. The company has also consistently shown positive results for the last three quarters.
One of the key highlights of Elpro International's performance is its high debtors turnover ratio of 38.12 times, indicating efficient management of its accounts receivables. The company's net sales and PBDIT have also been at their highest in the last quarter, at Rs 139.31 crore and Rs 68.03 crore respectively.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. In the long term, Elpro International has outperformed the BSE 500 index, generating 43.18% returns in the last year. Its return on capital employed (ROCE) is at 5.5, indicating a very expensive valuation with an enterprise value to capital employed ratio of 1.2.

However, 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 43.18%, its profits have risen by 121%, resulting in a PEG ratio of 0.1. This suggests that the stock may be undervalued.

It is worth noting that institutional investors have decreased their stake in Elpro International by -0.77% over the previous quarter and currently hold 10.46% of the company. This could be due to the company's smallcap size and the fact that institutional investors have better resources and capabilities to analyze the fundamentals of companies.

Overall, while Elpro International has shown strong performance in the past year, with a positive outlook for the future, MarketsMOJO has downgraded the stock to 'Hold' due to its current valuation and decreasing participation by institutional investors. Investors should carefully consider these factors before making any investment decisions.