Mangalam Drugs and Organics Upgraded to 'Buy' by MarketsMOJO After Strong Q1 Results

Mangalam Drugs and Organics, a microcap pharmaceutical company, has recently caught the attention of investors as its stock has been upgraded to 'Buy' by MarketsMOJO on July 26, 2024. This upgrade comes after the company reported positive results in the first quarter of the financial year 2024, with its operating profit to interest ratio reaching a high of 2.96 times and net sales at Rs 102.24 crore. Additionally, its PBDIT also reached a high of Rs 11.71 crore.
The stock is currently in a bullish range and its technical trend has improved from mildly bullish to bullish on July 26, 2024. This is supported by multiple factors such as MACD, Bollinger Band, and KST. With a ROCE of 1.2, the stock is attractively valued with an enterprise value to capital employed ratio of 1.1. It is also trading at a discount compared to its average historical valuations.

However, there are some risks associated with investing in Mangalam Drugs and Organics. The company has a high debt to EBITDA ratio of 2.77 times, which may affect its ability to service debt. Additionally, its return on equity has been low at 8.64%, indicating low profitability per unit of shareholders' funds. The company has also 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.

In the last 1 year, the stock has underperformed the market, generating a return of only 3.47% compared to the market (BSE 500) returns of 36.61%. It is important for investors to carefully consider these risks before making any investment decisions.

Despite these risks, Mangalam Drugs and Organics has majority shareholders in the form of promoters, which can be seen as a positive sign. With its recent positive results and bullish technical trend, the stock may be a good buy for investors looking for a microcap pharmaceutical company with potential for growth.