Igarashi Motors India Upgraded to 'Buy' Rating, Attracts Investor Attention with Strong Financial Performance

Igarashi Motors India, a smallcap company in the auto ancillary industry, has recently caught the attention of investors with its upgraded 'Buy' rating by MarketsMOJO on November 11, 2024.
The company's strong ability to service debt, with a low Debt to EBITDA ratio of 1.10 times, is one of the main reasons for the upgrade. In addition, Igarashi Motors India has shown impressive growth in its net profit, with a 58.75% increase in Jun 24. Its operating profit to net sales ratio is also at its highest at 11.40%, with a PAT of Rs 8.16 cr and net sales of Rs 222.07 cr in the same quarter.

Technically, the stock is in a bullish range and has shown improvement in its technical trend from mildly bullish on November 5, 2024. Multiple factors, such as MACD, Bollinger Band, and OBV, also indicate a bullish outlook for the stock.

However, there are some risks to consider. The company has shown poor long-term growth, with an annual rate of -10.27% in operating profit over the last 5 years. Its ROCE of 4.3 also indicates an expensive valuation, with an enterprise value to capital employed ratio of 4.3. Despite this, the stock is currently trading at a discount compared to its average historical valuations.

Another factor to note is that domestic mutual funds hold only 0.73% of the company, which may suggest that they are not comfortable with the current price or the business. This is despite the fact that domestic mutual funds have the capability to conduct in-depth research on companies.

In conclusion, Igarashi Motors India's upgraded 'Buy' rating and strong financial performance make it an attractive investment option. However, investors should also consider the risks associated with the company's long-term growth and valuation.