Gensol Engineering receives 'Hold' rating from MarketsMOJO for strong growth and positive results

Gensol Engineering, a smallcap engineering company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the company's healthy long-term growth, positive financial results, and technical trend.
According to MarketsMOJO, Gensol Engineering has shown a consistent growth in net sales, with an annual rate of 86.20%. Its operating profit has also seen a significant increase of 203.72%. The company has declared positive results for the last three consecutive quarters, with its PBDIT (Q) at Rs 87.68 crore, PBT LESS OI (Q) at Rs 25.49 crore, and NET SALES (Q) at Rs 295.15 crore.

The stock is currently in a mildly bullish range, with its technical trend improving from sideways on 16-Sep-24. The key technical factor, RSI, has been bullish since 16 Sep 2024. Gensol Engineering has also consistently outperformed BSE 500 in the last three annual periods, with a return of 47.58% in the last year.

However, the company has a high debt to EBITDA ratio of 3.17 times, indicating a low ability to service debt. Its ROCE is also at 10.5, which is considered expensive, with an enterprise value to capital employed ratio of 3.2. The stock is currently trading at a higher valuation compared to its historical average.

Moreover, 78.44% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. This proportion has also increased by 15.38% over the last quarter.

In conclusion, while Gensol Engineering has shown strong growth and positive financial results, its high debt and expensive valuation may be a cause for concern. Investors are advised to hold onto their stocks for now and monitor the company's performance closely.