Majestic Auto Receives 'Hold' Rating from MarketsMOJO After Strong Profit Growth

Majestic Auto, a microcap company in the miscellaneous industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results in June 2024, with a growth in net profit of 313.6%. In fact, the company has consistently shown positive results for the last four quarters, with a PAT(Q) growth of 323.1% and a highest ROCE(HY) of 10.34%. Additionally, the company's inventory turnover ratio is at an impressive 106.94 times.
Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on 09-Aug-24. Multiple factors, such as MACD, Bollinger Band, and KST, indicate a bullish outlook for the stock.

The majority shareholders of Majestic Auto are its promoters, and the company has a track record of market-beating performance in both the long term and near term. In the last year alone, the stock has generated a return of 127.88% and has outperformed BSE 500 in the last 3 years, 1 year, and 3 months.

However, the company's long-term fundamental strength is weak, with a -7.86% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.86. Additionally, the company's return on equity (avg) is at a low 2.59%, indicating low profitability per unit of shareholders' funds.

At a current ROE of 5.2, Majestic Auto has a very expensive valuation with a price to book value of 0.6. However, the stock is currently trading at a discount compared to its average historical valuations. Despite its high valuation, the company has shown impressive profit growth, with a PEG ratio of 0. Furthermore, at its current price, the company offers a high dividend yield of 4.3%. Overall, while Majestic Auto may have some weaknesses in its fundamentals, its recent positive performance and potential for future growth make it a stock worth considering for a 'Hold' position.