MarketsMOJO Upgrades Century Extrusions to 'Hold' Based on Technical Factors and Valuation

MarketsMOJO has recently upgraded its stock call on Century Extrusions to 'Hold' on July 3, 2024. This decision is based on various technical factors, such as the stock being in a Mildly Bullish range and the technical trend improving from Sideways on July 3, 2024. Additionally, indicators like MACD, Bollinger Band, and KST are all showing a bullish trend for the stock.

Furthermore, the company's ROCE (Return on Capital Employed) stands at 18.5%, indicating a fair valuation with a 2 Enterprise value to Capital Employed. The stock is also currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 123.56%, while its profits have increased by 12.8%. However, the PEG ratio of the company is 1.9, which suggests that the stock may not have much potential for future growth.

The majority shareholders of Century Extrusions are the promoters, which can be seen as a positive sign for investors. The stock has also outperformed the market (BSE 500) with a return of 123.56% in the last year, compared to the market's return of 37.61%.

However, the company's ability to service its debt is weak, with a poor EBIT (Earnings Before Interest and Taxes) to Interest (avg) ratio of 1.74. This indicates that the company may struggle to meet its debt obligations. Additionally, the company has a low Return on Equity (avg) of 8.10%, which signifies low profitability per unit of shareholders' funds.

Moreover, the company has shown poor long-term growth, with Net Sales growing at an annual rate of 8.01% and Operating profit at 13.98% over the last 5 years. In the latest quarter, the company's results were flat, with the lowest OPERATING PROFIT TO INTEREST (Q) at 2.22 times and PBT LESS OI(Q) at Rs 1.92 crore.

In conclusion, while Century Extrusions' stock has shown a strong performance in the past year, its future potential may be limited. Investors should carefully consider the company's weak debt servicing ability and low profitability before making any investment decisions.