Jagatjit Industries Receives 'Hold' Rating Amid Bullish Trend and Attractive Valuation

Jagatjit Industries, a microcap company in the breweries industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the stock has shown a bullish trend and has improved from a mildly bullish status on May 2, 2024. The technical indicators such as MACD, Bollinger Band, and KST all point towards a bullish outlook for the stock.
One of the main reasons for the 'Hold' rating is the attractive valuation of the company. With a ROCE of 1.8 and an enterprise value to capital employed ratio of 4, the stock is trading at a discount compared to its historical valuations. Additionally, while the stock has generated a return of 95.19% in the past year, its profits have also increased by 37.3%. However, the PEG ratio of the company is 2.1, indicating that the stock may not have much potential for future growth.

Despite consistent returns over the last 3 years, Jagatjit Industries has weak long-term fundamental strength. The company has a high debt to equity ratio of 3.59 times and its operating profit has only grown at an annual rate of 17.66% over the last 5 years. This signifies a poor long-term growth potential for the company.

In December 2023, the company reported flat results with a decrease in PAT (HY) by 40.38%. The non-operating income for the quarter was 754.55% of the profit before tax, indicating a reliance on non-operating activities for profitability. The EPS (Q) was also at its lowest at Rs 0.13.

It is worth noting that despite being a microcap company, domestic mutual funds hold only 0.11% of Jagatjit Industries. This could signify that either they are not comfortable with the current price of the stock or they have concerns about the company's business. As domestic mutual funds have the capability to conduct in-depth research, their small stake in the company may raise some red flags for potential investors. Overall, while the stock may have shown a bullish trend, it is important to consider the company's weak long-term fundamentals before making any investment decisions.