Igarashi Motors India Receives 'Hold' Rating from MarketsMOJO Due to Poor Long-Term Growth and Expensive Valuation

Igarashi Motors India, a smallcap company in the auto ancillary industry, has recently received a 'Hold' rating from MarketsMOJO on November 16, 2024. This downgrade is due to the company's poor long-term growth and expensive valuation.
However, there are some positive aspects to the company's financials. Igarashi Motors India has a strong ability to service debt with a low Debt to EBITDA ratio of 1.10 times. In addition, the company has declared positive results for the last two consecutive quarters, with a growth in operating profit of 27.62% in September 2024. The company's net sales have also grown by 26.38% and its PAT (profit after tax) is higher at Rs 15.95 crore. Its ROCE (return on capital employed) is also at its highest at 7.30%.

Technically, the stock is in a mildly bullish range with its MACD and OBV technical factors also showing a bullish trend. However, the company's long-term growth has been poor, with an annual growth rate of -27.01% in operating profit over the last 5 years.

The company's ROCE of 7.1 indicates an expensive valuation with a 3.9 Enterprise value to Capital Employed. However, 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 23.26%, while its profits have risen by 91%. The PEG ratio of the company is 1, which suggests that the stock is fairly valued.

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

In conclusion, while Igarashi Motors India has shown positive financial results in the recent quarters, its long-term growth and expensive valuation have led to a 'Hold' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.