Majestic Auto Receives 'Hold' Rating from MarketsMOJO After Strong Q2 Results

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 has a high inventory turnover ratio of 106.94 times, indicating efficient management of its inventory.
From a technical standpoint, the stock is currently in a bullish range and has shown improvement since October 8, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, contribute to the bullish trend of the stock.

The majority shareholders of Majestic Auto are its promoters, indicating their confidence in the company's performance. The stock has also consistently generated returns over the last three years, outperforming the BSE 500 index.

However, the company's long-term fundamental strength is weak, with a -7.51% CAGR growth in operating profits over the last five years. Its ability to service 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 low at 2.59%, indicating low profitability per unit of shareholders' funds.

The stock is currently trading at a very expensive valuation, with a price to book value of 0.8 and a PEG ratio of 0. This suggests that the stock may be overvalued compared to its historical valuations. However, it is worth noting that while the stock has generated a return of 142.62% in the past year, its profits have risen by 562.8%, resulting in a PEG ratio of 0. This indicates that the stock may still have potential for growth in the future.

Overall, MarketsMOJO's 'Hold' rating on Majestic Auto reflects the company's recent positive performance and potential for future growth, but also highlights some concerns about its long-term fundamentals and valuation. Investors should carefully consider these factors before making any investment decisions.