Emami Paper Mills Upgraded to 'Hold' by MarketsMOJO Based on Technical Trend and Valuation

Emami Paper Mills, a microcap company in the paper and paper products industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on the company's current technical trend, valuation, and financial performance.
The technical trend for Emami Paper Mills has improved from Mildly Bearish to Sideways on October 11, 2024. This indicates that there is no clear price momentum for the stock. However, since then, the stock has generated a return of 0.35%.

In terms of valuation, the company has a ROCE of 12.9, which is considered Very Attractive. Additionally, it is currently trading at a discount compared to its average historical valuations. Despite the stock's negative return of -16.62% in the past year, its profits have increased by 480.4%. This results in a PEG ratio of 0, which is a positive sign for investors.

However, there are some concerns regarding the company's financial performance. Emami Paper Mills has a high Debt to EBITDA ratio of 3.90 times, indicating a low ability to service debt. Its long-term growth has also been poor, with Net Sales growing at an annual rate of 5.35% and Operating profit at 6.88% over the last 5 years.

In the most recent quarter, the company's results were flat, with PBT LESS OI(Q) at Rs 16.81 crore, a decrease of -38.2%, and PAT(Q) at Rs 12.80 crore, a decrease of -39.3%. The DEBTORS TURNOVER RATIO(HY) was also at its lowest at 7.57 times.

Moreover, there has been a decrease in institutional investors' stake in the company by -1.98% over the previous quarter. These investors, who have better resources and capabilities to analyze company fundamentals, now collectively hold only 1.53% of the company.

Overall, Emami Paper Mills has shown below par performance in both the long term and near term. Along with its negative return in the last year, the stock has also underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. Therefore, MarketsMOJO has upgraded its stock call to 'Hold' for Emami Paper Mills.