MarketsMOJO Upgrades Advik Capital to 'Hold' Rating Based on Strong Growth and Attractive Valuation

Advik Capital, a microcap company in the electric equipment industry, has recently received a 'Hold' rating from MarketsMOJO on April 29, 2024. This upgrade is based on the company's healthy long-term growth, with a 182.94% annual growth rate in net sales and a 43.77% growth in operating profit.
However, the technical trend for the stock is currently sideways, indicating no clear price momentum. This is an improvement from the previous mildly bearish trend on April 25, 2024, but has only generated a modest return of 0.38% since then.

One of the major factors contributing to the 'Hold' rating is the company's very attractive valuation, with a ROCE of 4.2 and an enterprise value to capital employed ratio of 1. This means that the stock is currently trading at a discount compared to its historical valuations.

Despite these positive aspects, Advik Capital has underperformed the market in the last year, with a negative return of -12.25%. This is in contrast to the market's return of 36.89% during the same period.

One of the reasons for this underperformance could be the company's poor management efficiency, with a low ROCE of 5.15%. This indicates that the company is not generating enough profitability per unit of total capital.

In addition, the company's financial results for March 2024 were flat, with a PAT of Rs 5.83 crore, which is a -31.17% decrease from the previous year. The PBT less OI (Q) was also at its lowest at Rs -2.62 crore. However, the non-operating income (Q) was 1,555.56% of the PBT, which could have contributed to the 'Hold' rating.

It is worth noting that the majority of shareholders in Advik Capital are non-institutional investors. This could potentially impact the stock's performance in the future.

Overall, while Advik Capital has shown potential for long-term growth, its current technical trend and underperformance in the market may warrant a 'Hold' rating for now. Investors should keep an eye on the company's management efficiency and financial results in the coming months to make informed decisions.