Mangalam Drugs and Organics Downgraded to 'Hold' by MarketsMOJO on July 15, 2024

Mangalam Drugs and Organics, a microcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on July 15, 2024. This decision is based on various factors, including the company's financial performance and technical indicators.
While the company has shown positive results in the quarter ending March 2024, with the highest operating profit to interest ratio of 2.96 times, net sales of Rs 102.24 crore, and PBDIT of Rs 11.71 crore, its stock is currently in a mildly bullish range. This is supported by multiple bullish technical indicators such as MACD, Bollinger Band, and KST.

However, the company's ROCE of 1.2 indicates an attractive valuation with a 1.1 enterprise value to capital employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations. Despite this, the stock has generated a negative return of -1.55% in the past year, while its profits have fallen by -812.6%.

The majority shareholders of Mangalam Drugs and Organics are promoters, but the company has a low ability to service debt with a high debt to EBITDA ratio of 2.77 times. Furthermore, its return on equity (average) of 8.64% signifies low profitability per unit of shareholders' funds.

In terms of long-term growth, the company has shown poor performance with net sales growing at an annual rate of 10.12% and operating profit at 1.43% over the last 5 years. Additionally, the stock has consistently underperformed against the benchmark over the last 3 years, with a negative return of -1.55% and underperformance against BSE 500 in each of the last 3 annual periods.

Overall, while Mangalam Drugs and Organics may have some positive aspects, the current downgrade to 'Hold' suggests caution for investors. It is important to carefully consider all factors before making any investment decisions.