MarketsMOJO Upgrades Nikhil Adhesives to 'Hold' Amid Strong Debt Servicing Ability

Nikhil Adhesives, a microcap company in the chemicals industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision is based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 0.88 times.
Technically, the stock is currently in a Mildly Bullish range, with an improved trend from Sideways on 23-Jul-24. The MACD and Bollinger Band technical factors are also Bullish, indicating a positive outlook for the stock.

However, the company's results for the quarter ending March 2024 were flat, with the lowest OPERATING PROFIT TO INTEREST (Q) at 4.25 times and the highest INTEREST(Q) at Rs 2.09 crore. Additionally, with a ROCE of 15.8, the stock is considered to have an expensive valuation with a 4.1 Enterprise value to Capital Employed.

Despite trading at a discount compared to its average historical valuations, the stock has underperformed the market in the last year, generating a return of only 4.25% while the market (BSE 500) has seen returns of 34.69%.

It is also worth noting that despite its small size, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

Overall, while Nikhil Adhesives may have potential for growth, it is currently facing challenges in terms of its financial performance and market performance. Investors may want to hold off on investing in this microcap company until there is more positive momentum and a clearer outlook for its future.