MarketsMOJO upgrades Smiths & Founders (India) to 'Hold' rating after positive Q2 results

Smiths & Founders (India), a microcap company in the castings/forgings industry, has recently received a 'Hold' rating from MarketsMOJO on November 6, 2024. This upgrade comes after the company reported positive results in June 2024, with a higher PAT of Rs. 0.68 crore and PBDIT of Rs. 0.39 crore, the highest in the quarter. The stock is currently in a bullish range, with technical indicators such as MACD, Bollinger Band, and KST showing positive trends.
The majority shareholders of Smiths & Founders (India) are non-institutional investors, and the stock has shown market-beating performance in both the long term and near term. In the last year, the stock has generated a return of 66.36%, outperforming the BSE 500 index. This trend has also been seen in the last 3 years and 3 months.

However, the company's long-term fundamental strength is weak, with an average ROCE of 6.15%. The net sales have only grown by 2.93% annually in the last 5 years, and the operating profit has only increased by 21.43%. Additionally, the company's ability to service its debt is poor, with an EBIT to Interest ratio of 0.23.

The stock is currently trading at a very expensive valuation, with an enterprise value to capital employed ratio of 3.6. However, it is still at a discount compared to its average historical valuations. While the stock has generated a high return of 66.36% in the last year, its profits have only risen by 43%, resulting in a PEG ratio of 0.6.

Overall, MarketsMOJO's 'Hold' rating on Smiths & Founders (India) suggests a neutral stance on the stock, taking into consideration both its positive and negative aspects. Investors should carefully evaluate the company's financial performance and future prospects before making any investment decisions.