MarketsMOJO Upgrades Mishtann Foods to 'Hold' Rating, Despite Concerns Over Debt and Stock Performance

Mishtann Foods, a smallcap FMCG company, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This decision is based on the company's healthy long-term growth, with an annual operating profit growth rate of 48.34%. In addition, the company has shown positive results in the third quarter of 2024, with a 35.95% growth in net sales and a record high PBDIT of Rs 108.35 crore. The operating profit to net sales ratio has also reached a high of 31.69%.
Despite these positive indicators, there are some concerns to consider. The company's ROE of 43.5 is attractive, but its high debt to EBITDA ratio of 3.88 times raises concerns about its ability to service debt. Additionally, the stock is currently trading at a discount compared to its historical valuations, which may indicate a lack of investor interest.

Technically, the stock is in a mildly bearish range and the Bollinger Band has been bearish since November 25, 2024. Furthermore, there has been a decrease in promoter confidence as they have reduced their stake in the company by -3.39% in the previous quarter. This could be a sign of reduced confidence in the future of the business.

In terms of performance, Mishtann Foods has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a negative return of -10.41% in the last year. While the company's profits have increased by 593%, the stock has not reflected this growth, with a PEG ratio of 0.

In conclusion, while Mishtann Foods has shown promising growth and attractive valuation, there are some concerns to consider before making any investment decisions. The 'Hold' rating by MarketsMOJO suggests a neutral stance, and investors should carefully evaluate all factors before making any decisions.