MarketsMOJO Upgrades Ashoka Refineries to 'Hold' Rating After Positive Q1 Results

Ashoka Refineries, a microcap company in the solvent extraction industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared positive results in March 2024, following two consecutive negative quarters.
The company's PBDIT(Q), PBT LESS OI(Q), and PAT(Q) have all shown significant improvement, with the highest values at Rs 0.02 cr. Additionally, the stock is currently in a bullish range and the technical trend has improved from mildly bullish on May 23, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, also indicate a bullish outlook for the stock.

Majority shareholders of Ashoka Refineries are non-institutional investors, and the stock has shown market-beating performance in both the long term and near term. In the last year, the stock has generated a return of 110.58%, outperforming the BSE 500 index.

However, the company's long-term fundamental strength is weak, with an average ROE of 3.15%. The operating profit has only grown at an annual rate of 3.56% over the last 5 years, indicating poor long-term growth. Additionally, the company's ability to service its debt is weak, with a poor EBIT to Interest (avg) ratio of 0.02.

With a ROE of 0.7, Ashoka Refineries has a risky valuation with a 1.4 price to book value. The stock is currently trading at a premium compared to its average historical valuations. Despite generating a high return of 110.58% in the past year, the company's profits have fallen by -7%.

Overall, while the recent positive results and bullish technical indicators may make Ashoka Refineries an attractive option for short-term investors, the weak long-term fundamentals and high valuation may make it a risky investment for those looking for stable returns. Investors are advised to do their own research and consult with a financial advisor before making any investment decisions.