Franklin Industries downgraded to 'Hold' by MarketsMOJO due to weak fundamentals and debt concerns

Franklin Industries, a microcap real estate company, has recently been downgraded to a 'Hold' by MarketsMOJO on May 23, 2024. This decision was based on the company's latest financial results and technical trends.
Despite declaring outstanding results in December 2023 with a growth in Operating Profit of 988.37%, the company's stock is currently in a bullish range. It has also shown positive results for the last four consecutive quarters, with PBT LESS OI(Q) growing at 983.72% and ROCE(HY) reaching a high of 78.91%. Additionally, the company's NET SALES(Q) have also reached a record high of Rs 16.73 crore.

The technical trend for the stock has improved from Mildly Bullish on May 10, 2024, and has generated a return of 54.09% since then. Multiple factors, such as MACD, Bollinger Band, KST, DOW, and OBV, indicate a bullish outlook for the stock.

With a ROE of 128.6, the stock is currently trading at a fair value with a 19 Price to Book Value. It has also shown a market-beating performance in the long term, generating a return of 754.76% in the last year and outperforming BSE 500 in the last 3 years, 1 year, and 3 months.

However, the company's long-term fundamental strength is weak, with a 5.92% CAGR growth in Net Sales over the last 5 years. Its ability to service its debt is also poor, with a low EBIT to Interest (avg) ratio of 0.56. The company's Return on Equity (avg) of 3.23% also signifies low profitability per unit of shareholders' funds.

Majority shareholders of Franklin Industries are non-institutional investors, indicating a lack of interest from big investors. While the stock has shown impressive returns in the past year, its fundamental strength and debt-servicing ability raise concerns for long-term investors. MarketsMOJO's downgrade to 'Hold' suggests a cautious approach towards investing in this microcap real estate company.