Frontier Springs Receives 'Hold' Rating from MarketsMOJO, Despite Strong Performance in Past Year

Frontier Springs, a microcap company in the auto ancillary industry, has recently received a 'Hold' rating from MarketsMOJO on October 24, 2024. This downgrade is due to the company's low Debt to Equity ratio, which is currently at 0 times.
However, the company has shown outstanding results in the last quarter with a growth in net profit of 275.27%. It has also consistently declared positive results for the past four quarters, with its highest ROCE (HY) at 18.99% and highest net sales (Q) at Rs 50.75 crore. Its PBDIT (Q) is also at a high of Rs 9.74 crore.

Technically, the stock is in a mildly bullish range with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. It has also shown consistent returns over the last three years, outperforming the BSE 500 index in each of the last three annual periods.

However, the company's long-term growth has been poor, with net sales growing at an annual rate of 12.54% and operating profit at 15.27% over the last five years. Its ROE is at 20.3, making its valuation very expensive with a price to book value of 9.5. The stock is currently trading at a premium compared to its historical valuations.

Despite its strong performance in the past year, with a return of 232.57%, the company's profits have only risen by 153.5%. This gives the company a PEG ratio of 0.3, indicating that it may be overvalued.

It is also worth noting that despite its small size, domestic mutual funds hold only 0% of the company. This could signify that they are not comfortable with the current price or the business itself.

Overall, while Frontier Springs has shown strong performance in the past year, its long-term growth and valuation may be a cause for concern. Investors may want to hold off on buying or selling the stock until there is more clarity on its future prospects.