Gensol Engineering: A Smallcap Company with Strong Growth Potential and Recent 'Buy' Rating

Gensol Engineering, a smallcap engineering company, has recently caught the attention of investors as its stock has been upgraded to 'Buy' by MarketsMOJO on July 2, 2024.
The company has shown healthy long-term growth with an annual increase of 86.20% in net sales and 203.72% in operating profit. In fact, in the last quarter, Gensol Engineering declared very positive results with a growth in net sales of 81.08%. This trend has been consistent for the past two quarters, with PBDIT(Q) at its highest at Rs 78.76 cr, PAT(Q) at Rs 24.33 cr, and NET SALES(Q) at Rs 398.82 cr.

Technically, the stock is in a bullish range and has shown improvement from mildly bullish to bullish on July 2, 2024. The MACD and Bollinger Band technical factors also indicate a bullish trend.

Gensol Engineering has consistently outperformed BSE 500 in the last three years, generating a return of 129.10% in the last year alone. However, there are some risks associated with investing in this company. The high debt to EBITDA ratio of 3.17 times may affect its ability to service debt. Additionally, with a ROCE of 10.5, the stock is currently trading at a very expensive valuation with an enterprise value to capital employed ratio of 3.4. The PEG ratio of the company is also at 0.3, indicating a high valuation compared to its historical average.

Moreover, 63.06% of promoter shares are pledged, which may put additional downward pressure on the stock prices in falling markets. In fact, the proportion of pledged holdings has increased by 20.28% in the last quarter.

Despite these risks, Gensol Engineering has shown strong growth potential and has consistently delivered positive results. With its recent upgrade to 'Buy' by MarketsMOJO, it may be a good investment opportunity for those looking for long-term growth in the engineering industry.