Hardwyn India Receives 'Hold' Rating from MarketsMOJO, Concerns Remain on Debt and Valuation

Hardwyn India, a smallcap company in the aluminium and aluminium products industry, has recently received a 'Hold' rating from MarketsMOJO on September 19, 2024.

The decision to upgrade the stock to a 'Hold' comes from the company's healthy long-term growth, with a 26.30% annual growth rate in net sales and a 69.11% growth in operating profit. Additionally, the technical trend for the stock has improved from sideways to mildly bullish, with factors such as MACD, Bollinger Band, KST, and OBV all pointing towards a bullish outlook.

However, there are some concerns regarding the company's ability to service its debt, as it has a high debt to EBITDA ratio of 3.02 times. This could potentially impact the company's profitability, as seen in the flat results for the quarter ending June 2024, with a 47.6% decrease in PAT and the lowest EPS at Rs 0.04.

Furthermore, with a return on equity of 2.7, the stock is currently trading at a very expensive valuation with a price to book value of 4.1. However, it is worth noting that the stock is currently trading at a discount compared to its average historical valuations.

In the past year, the stock has generated a return of 10.61%, which is significantly lower than the market (BSE 500) returns of 34.74%. This underperformance could be attributed to the fact that domestic mutual funds hold only 0% of the company, indicating a lack of confidence in the stock. This could be due to either the high valuation or a lack of comfort with the company's business.

In conclusion, while Hardwyn India shows potential for growth in the long term, there are some concerns regarding its debt and valuation. Investors may want to hold off on investing in the stock until there is more clarity on these issues.