Hilton Metal Forging Receives 'Hold' Rating, Positive Results Reported

Hilton Metal Forging, a microcap company in the castings and forgings industry, has recently received a 'Hold' rating from MarketsMOJO on December 4th, 2023. This upgrade comes after the company reported positive results in September 2023, with a 90.09% growth in profit after tax and a 3.34 times increase in operating profit to interest ratio. Additionally, the company's net sales also reached a high of Rs 34.81 crore.
Despite these positive developments, the technical trend for the stock remains sideways, indicating no clear price momentum. However, the technical trend has improved from mildly bearish on December 8th, 2023. With a return on capital employed (ROCE) of 8.6, the stock is currently trading at an attractive valuation with a 2.5 enterprise value to capital employed ratio. It is also trading at a discount compared to its average historical valuations.

Over the past year, Hilton Metal Forging has generated a return of 107.49%, outperforming the BSE 500 index. However, its profits have only risen by 0.9%, indicating weak long-term fundamental strength. The company also has a low ability to service debt, with a high debt to EBITDA ratio of 7.39 times.

Majority shareholders of Hilton Metal Forging are non-institutional investors. The company has consistently delivered returns over the last three years, outperforming the BSE 500 index in each of the last three annual periods. However, its long-term growth has been poor, with a 3.87% annual growth rate in net sales over the last five years.

In conclusion, while Hilton Metal Forging has shown positive results in the recent quarter and has outperformed the market in terms of returns, its long-term fundamental strength and growth potential may be a cause for concern. Investors may want to hold onto their positions for now and monitor the company's performance closely.