Igarashi Motors India: A Promising Investment with Strong Financial Performance and Positive Outlook

Igarashi Motors India, a smallcap company in the auto ancillary industry, has recently caught the attention of investors with its strong financial performance and positive outlook. MarketsMOJO has upgraded its stock call to 'Buy' on November 19, 2024, citing multiple factors that make it a promising investment.
One of the key reasons for the 'Buy' recommendation is the company's ability to service its debt, with a low Debt to EBITDA ratio of 1.10 times. This indicates a strong financial position and reduces the risk for investors. Additionally, the company has shown a growth in Operating Profit of 27.62% and declared positive results for the last two consecutive quarters, further solidifying its position in the market.

In terms of financials, Igarashi Motors India has shown impressive growth with a 26.38% increase in net sales and a higher PAT of Rs 15.95 crore in the last half year. Its ROCE (Return on Capital Employed) is also at its highest at 7.30%, indicating efficient use of capital. The stock is also technically in a bullish range, with multiple factors such as MACD, Bollinger Band, and OBV pointing towards a positive trend.

Not only has the stock performed well in the near term, generating 39.92% returns in the last year, but it has also outperformed the BSE 500 in the last 3 years, 1 year, and 3 months. This makes it a market-beating performer in both the long and near term.

However, there are some risks to consider before investing in Igarashi Motors India. The company has shown poor long-term growth with an annual rate of -27.01% in Operating Profit over the last 5 years. Additionally, with a ROCE of 7.1, the stock is currently trading at an expensive valuation with a 4.2 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations, with a PEG ratio of 1.1.

Another factor to consider is that despite its size, domestic mutual funds hold only 0.73% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

In conclusion, Igarashi Motors India shows strong potential for growth and has been upgraded to a 'Buy' by MarketsMOJO. However, investors should carefully consider the risks involved before making any investment decisions.