Mangalam Drugs and Organics receives 'Hold' rating after positive Q1 results

Mangalam Drugs and Organics, a microcap pharmaceutical company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported positive results in the quarter ending March 2024. The company's operating profit to interest ratio was at an impressive 2.96 times, while its net sales and PBDIT were also at their highest levels at Rs 102.24 crore and Rs 11.71 crore respectively.
However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The stock has also underperformed the market in the last year, generating a return of only 6.68% compared to the market's 37.38%. Despite this, the stock has shown improvement since the 'Mildly Bearish' trend on June 14, 2024, generating a return of 3.71%.

One of the major concerns for Mangalam Drugs and Organics is its high debt to EBITDA ratio of 2.77 times, indicating a low ability to service debt. The company's profitability per unit of shareholders' funds is also low, with a return on equity of 8.64%. Additionally, the company has shown poor long-term growth, with net sales growing at an annual rate of 10.12% and operating profit at 1.43% over the last 5 years.

Despite these challenges, the stock is currently trading at a discount compared to its average historical valuations, making it an attractive option for investors. The majority shareholders of the company are the promoters, which can provide some stability and confidence in the company's future. However, it is important to note that this is not a recommendation to buy or sell the stock, as it is purely based on facts and data. Investors should conduct their own research and analysis before making any investment decisions.