MarketsMOJO Upgrades Apollo Micro Systems to 'Hold' Amidst Strong Growth and High Valuation Concerns

Apollo Micro Systems, a smallcap company in the electronics components industry, has recently received a 'Hold' rating from MarketsMOJO on November 6, 2024. This upgrade comes as the company has shown healthy long-term growth, with an annual operating profit growth rate of 34.51%.

In addition, the company has declared outstanding results for the quarter ending September 24, with a 139.79% growth in net profit. This positive trend has been consistent for the last five consecutive quarters, with a growth of 84.39% in net sales and 158.21% in PBT less OI. The company's PAT has also seen a significant growth of 139.3%.

However, despite these positive results, the stock is currently in a mildly bearish range. Technical factors such as MACD and KST also indicate a bearish trend. Furthermore, with a ROCE of 12.3, the stock is considered to have a very expensive valuation, with an enterprise value to capital employed ratio of 4.4.

On the bright side, the stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has only generated a return of 0.30%, its profits have risen by 105%. The PEG ratio of the company stands at 1.2.

Investors should also take note that 25.3% of promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets. This percentage has increased by 7.85% in the last quarter.

Overall, Apollo Micro Systems has underperformed the market in the last year, with a return of only 0.30% compared to the market's (BSE 500) return of 33.50%. While the company has shown positive growth, investors should carefully consider the current bearish trend and high valuation before making any investment decisions.