Kennametal India Downgraded to 'Hold' by MarketsMOJO, Despite Positive Results

Kennametal India, a midcap engineering company, has recently been downgraded to a 'Hold' by MarketsMOJO on September 16, 2024. The decision to hold the stock is based on various factors, including the company's low Debt to Equity ratio, which is currently at 0 times.

Despite positive results in June 2024, with the company's net sales reaching a high of Rs 302.40 crore and PBDIT at Rs 48.70 crore, the stock is currently in a mildly bullish range. This is supported by multiple factors such as MACD, Bollinger Band, and KST.

The majority shareholders of Kennametal India are its promoters, which can be seen as a positive sign for the company. However, the company has shown poor long-term growth with only a 3.48% annual growth rate in net sales and 1.44% in operating profit over the last 5 years.

With a ROE of 18.1, the stock is currently trading at a very expensive valuation with a price to book value of 11.3. However, it is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 20.76%, while its profits have only risen by 15.5%. This results in a PEG ratio of 4, which may be a cause for concern.

In the last year, Kennametal India has underperformed the market, with a return of 20.76% compared to the market's (BSE 500) return of 34.97%. This may be a factor to consider when making investment decisions.

Overall, while Kennametal India may have some positive aspects, the current hold rating and various factors such as expensive valuation and underperformance in the market may warrant caution for potential investors.