Enkei Wheels India Upgraded to 'Hold' by MarketsMOJO, Positive Results in Short Term.

Enkei Wheels India, a smallcap company in the auto ancillary industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This upgrade comes after the company has declared positive results for the last four consecutive quarters. In the half-yearly results, the company's PAT has grown by an impressive 179.67%, with the highest operating cash flow of Rs 58.51 crore. The net sales have also shown a growth of 36.17% in the same period.
Technically, the stock is in a bullish range and has shown improvement from mildly bullish on 31-Oct-24. Multiple factors like MACD, Bollinger Band, KST, and DOW are also bullish for the stock.

However, the company's long-term fundamental strength is weak with an average ROCE of 2.49%. The net sales have only grown at an annual rate of 12.10% over the last five years, indicating poor long-term growth. The company also has a high debt to EBITDA ratio of 4.05 times, which shows a low ability to service debt.

Enkei Wheels India also has an expensive valuation with an ROCE of 4.8 and an enterprise value to capital employed ratio of 3.6. However, the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 22.13%, while its profits have risen by 514.1%. The PEG ratio of the company is also at a low 0.1.

It is worth noting that despite being a smallcap company, domestic mutual funds hold only 0% of the company. This could signify that they are not comfortable with the current price or the business, as domestic mutual funds have the capability to conduct in-depth research on companies.

In the last year, Enkei Wheels India has underperformed the market, generating a return of 22.13% compared to the market's (BSE 500) return of 34.33%. Overall, while the company has shown positive results in the short term, its long-term fundamental strength and underperformance in the market may be a cause for concern for investors.