Mahalaxmi Rubtech Receives 'Hold' Rating After Positive Results and Record High ROCE

Mahalaxmi Rubtech, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported positive results in December 2023, with a 27.71% growth in its PAT (HY) at Rs 5.07 crore and a record high ROCE (HY) of 11.67%. Additionally, the company's cash and cash equivalents (HY) also reached a new high at Rs 44.18 crore.
Technically, the stock is currently in a mildly bullish range and has shown improvement from a sideways trend on 02 May 2024. The key technical factor, RSI, has also been bullish since 02 May 2024. With an ROE of 9.8, the stock is currently trading at an attractive valuation with a price to book value of 2.4, which is at a discount compared to its historical average.

However, the stock has underperformed the market in the last year, generating negative returns of -27.81% while the market (BSE 500) has seen a return of 36.71%. This can be attributed to the company's weak long-term fundamental strength, with an average ROCE of 8.22% and poor growth in net sales (10.11%) and operating profit (14.00%) over the last 5 years.

It is worth noting that the majority shareholders of Mahalaxmi Rubtech are promoters, indicating their confidence in the company's future prospects. However, it is important to consider the company's underperformance in the market and its weak long-term growth before making any investment decisions.