L G Balakrishnan & Bros downgraded to 'Hold' by MarketsMOJO, positive results in latest quarter

L G Balakrishnan & Bros, a smallcap company in the engineering industry, has recently been downgraded to a 'Hold' by MarketsMOJO on November 11, 2024. This decision was based on the company's current performance and future potential.
The company has shown high management efficiency with a ROE of 15.40%, indicating good profitability. It also has a low Debt to Equity ratio of 0.08 times, which is a positive sign for investors.

In the latest quarter, L G Balakrishnan & Bros has reported positive results with its operating cash flow at Rs 342.75 crore, inventory turnover ratio at 6.12 times, and net sales at Rs 660.93 crore. However, the technical trend for the stock is currently sideways, indicating no clear price momentum.

With a ROE of 15.2, the stock is currently trading at an attractive valuation with a price to book value of 2.3. It is also trading at a fair value compared to its average historical valuations. In the past year, the stock has generated a return of 17.72%, while its profits have risen by 9.3%. However, the PEG ratio of the company is 2, which suggests that its growth may not be sustainable.

On a positive note, the promoters of L G Balakrishnan & Bros have increased their stake in the company by 1.04% in the previous quarter, currently holding 34.8% of the company. This shows their high confidence in the future of the business.

However, the company has shown poor long-term growth with a net sales growth rate of only 8.47% over the last 5 years. In the last 1 year, the stock has also underperformed the market, generating a return of 17.72% compared to the market's return of 30.30%.

Overall, while L G Balakrishnan & Bros has shown positive results in the latest quarter and has a strong management efficiency, its long-term growth and recent underperformance in the market may be a cause for concern. Investors are advised to hold their positions and monitor the company's performance closely.