Hi-Tech Gears Upgraded to 'Hold' by MarketsMOJO, Shows Positive Financial Growth

The Hi-Tech Gears, a smallcap company in the auto ancillary industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on the company's positive financial results for the last three quarters, with a 65.05% growth in PAT (9M) and a highest ROCE (HY) of 12.91%. Additionally, the company has a low debt-equity ratio of 0.64 times.
Technically, the stock is in a mildly bullish range and has shown a 2.3% return since the technical trend improved from sideways on 28-Oct-24. Multiple factors, such as RSI, MACD, and KST, indicate a bullish trend for the stock.

Attractive valuation is another reason for the 'Hold' call, with a ROCE of 12.5 and an enterprise value to capital employed ratio of 2.3. The stock is currently trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 93.76%, while its profits have risen by 67%. The PEG ratio of the company is also at a low 0.4.

However, the company's long-term fundamental strength is weak, with a CAGR growth of only 9.45% in operating profits over the last 5 years. The high debt to EBITDA ratio of 3.41 times also raises concerns about the company's ability to service its debt. The return on equity (avg) of 5.78% also indicates low profitability per unit of shareholders' funds.

It is worth noting that despite its smallcap size, domestic mutual funds hold only 0% of the company. This could signify that they are either not comfortable with the current price or have concerns about the business. As domestic mutual funds have the capability to conduct in-depth research on companies, their small stake in The Hi-Tech Gears may raise some red flags for potential investors.