Genus Paper & Boards Receives 'Hold' Rating

Genus Paper & Boards, a microcap company in the paper and paper products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results in September 2023, with a growth in operating profit of 51.29%. The company's operating profit to interest ratio and operating profit to net sales ratio were also at their highest levels, at 2.40 times and 9.68%, respectively. Additionally, the PBT less OI ratio was at Rs 4.45 crore, the highest it has been.
Technically, the stock is currently in a mildly bullish range and has shown improvement from a sideways trend on 27 December 2023. The MACD, a key technical factor, has been bullish since the same date. With a ROCE of 3.1, the stock is considered to have an attractive valuation with an enterprise value to capital employed ratio of 1. It is also trading at a discount compared to its average historical valuations. However, despite generating a return of 7.56% in the past year, the company's profits have fallen by -113.3%.

The majority shareholders of Genus Paper & Boards are the promoters, indicating their confidence in the company. However, the company has weak long-term fundamental strength, with a -145.87% CAGR growth in operating profits over the last 5 years. Its return on equity (average) is also low at 2.60%, indicating low profitability per unit of shareholders' funds.

In the last year, the stock has underperformed the market, generating a return of 7.56% compared to the market's (BSE 500) return of 24.26%. While the upgrade to a 'Hold' rating may be seen as a positive sign, investors should carefully consider the company's weak long-term fundamentals before making any investment decisions.