Kernex Microsystems (India) Upgraded to 'Hold' by MarketsMOJO, Shows Strong Growth and Technical Trends

Kernex Microsystems (India) has recently caught the attention of investors as its stock call has been upgraded to 'Hold' by MarketsMOJO on August 26, 2024. The company, which operates in the IT software industry and falls under the smallcap category, has shown a significant growth in net sales of 221.89% in the last quarter, leading to a positive outcome in June 2024.
One of the key factors contributing to the upgrade is the company's high operating profit to interest ratio, which stands at 4.72 times. This is the highest among its peers and indicates a strong ability to generate profits to cover its interest expenses. Additionally, the company has also shown a high debtors turnover ratio of 54.42 times, further highlighting its efficient management of accounts receivables.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from mildly bullish to bullish on August 26, 2024. This is supported by multiple factors such as MACD, Bollinger Band, KST, DOW, and OBV.

Kernex Microsystems (India) has also delivered consistent returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. In the last 1 year alone, the stock has generated a return of 142.56%, showcasing its strong performance in the market.

However, the company's long-term fundamental strength is weak, with a negative CAGR growth in operating profits of -153.41% over the last 5 years. This raises concerns about its ability to sustain its growth in the future. Additionally, the company's EBIT to interest ratio is also poor at -5.68, indicating a weak ability to service its debt.

Moreover, Kernex Microsystems (India) has a low return on equity of 2.23%, which signifies low profitability per unit of shareholders' funds. This is a cause for concern for potential investors.

Another factor to consider is the company's negative EBITDA, which makes the stock a risky investment compared to its historical valuations. While the stock has shown a strong return in the past year, its profits have declined by -26.1%.

It is also worth noting that despite its smallcap size, domestic mutual funds hold only 0% of the company's shares. This could indicate 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 Kernex Microsystems (India) has shown positive growth and technical trends, its weak long-term fundamental strength and negative EBITDA make it a risky investment. Investors should carefully consider these factors before making any decisions.