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

Nikhil Adhesives, a microcap company in the chemicals industry, has recently been upgraded to a 'Hold' by MarketsMOJO on January 29, 2024. This upgrade 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 bullish range and has shown improvement since January 25, 2024, generating a return of -2.05%. This is supported by multiple bullish factors such as MACD, Bollinger Band, and KST.

However, the company has declared negative results for the last 5 consecutive quarters, with its lowest operating cash flow at Rs 20.58 crore and a decline in net sales by -13.0%. Its profits have also fallen by -37.96% in the last half-year.

With a ROCE of 14.8, the company has an expensive valuation with a 4 Enterprise value to Capital Employed. However, the stock is currently trading at a discount compared to its average historical valuations.

Despite its size, domestic mutual funds hold only 0% of the company, which could indicate their discomfort with the current price or the business.

In the last year, Nikhil Adhesives has underperformed the market, generating a return of only 2.45%, while the market (BSE 500) has seen a return of 31.60%. This could be a cause for concern for potential investors.

Overall, while the stock has shown some positive technical trends, its negative financial results and underperformance in the market may make it a risky investment. Investors are advised to do their own research and consider all factors before making any decisions.