HBL Power Systems downgraded to 'Hold' by MarketsMOJO, financials remain strong

HBL Power Systems, a midcap company in the battery industry, has recently been downgraded to a 'Hold' by MarketsMOJO on September 23, 2024. This decision was based on the company's low Debt to Equity ratio, which is currently at 0 times, indicating a healthy financial position.
The company has also shown strong long-term growth, with an annual rate of 42.86% in operating profit and a 15.73% growth in net profit in the last quarter. In fact, HBL Power Systems has declared positive results for the last 5 consecutive quarters, with a PAT (HY) of Rs 178.41 crore, growing at 103.59%, and a NET SALES (HY) of Rs 1,130.20 crore, growing at 29.90%. Its ROCE (HY) is also at its highest at 31.06%.

Technically, the stock is in a Mildly Bullish range, with its MACD and KST technical factors also showing a Bullish trend. Additionally, the stock has consistently outperformed BSE 500 in the last 3 annual periods, generating a return of 144.55% in the last 1 year.

However, with a ROE of 24.6, the stock is currently trading at a Very Expensive valuation, with a 13.9 Price to Book Value. This is a premium compared to its average historical valuations. Moreover, while the stock has generated a return of 144.55% in the last year, its profits have only risen by 153.1%, resulting in a PEG ratio of 0.3.

It is also worth noting that despite its size, domestic mutual funds hold only 0.31% of the company. This could signify that they are either not comfortable with the current price or have not conducted in-depth research on the company.

In conclusion, while HBL Power Systems has shown strong financial performance and technical indicators, its expensive valuation and low interest from domestic mutual funds may be a cause for concern. Investors are advised to hold on to their stocks and monitor the company's performance closely.