MarketsMOJO Upgrades Raghuvir Synthetics to 'Hold' Amid Positive Results and Bullish Trend

MarketsMOJO, a leading financial analysis firm, has recently upgraded its stock call on Raghuvir Synthetics to 'Hold'. This microcap company in the textile industry has been showing positive results for the past 5 consecutive quarters, with a higher PAT (HY) of Rs 4.00 crore and the highest NET SALES (Q) of Rs 75.21 crore.

Technically, the stock is currently in a bullish range and has shown a significant improvement since 30-Aug-24, generating a return of 4.87%. Multiple factors such as MACD, Bollinger Band, and KST are also indicating a bullish trend for the stock.

However, the company's long-term fundamental strength is weak, with a -245.62% CAGR growth in Operating Profits over the last 5 years. Its ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of -0.88. Additionally, the company's Return on Equity (avg) of 5.46% signifies low profitability per unit of shareholders' funds.

With an ROCE of 8.8, the stock is currently trading at an expensive valuation, with a 9.5 Enterprise value to Capital Employed. However, it is still trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 11.39%, while its profits have risen by 175.7%. The PEG ratio of the company is also at a favorable 0.5.

Despite its small size, domestic mutual funds hold only 0% of the company, indicating that they may not be comfortable with the current price or the business. Moreover, Raghuvir Synthetics has underperformed the market in the last 1 year, with a return of 11.39% compared to the market (BSE 500) returns of 38.49%.

In conclusion, while MarketsMOJO has upgraded its stock call to 'Hold', investors should carefully consider the company's weak long-term fundamental strength and expensive valuation before making any investment decisions.