MarketsMOJO Upgrades Vascon Engineers to 'Hold' Rating Based on Healthy Growth and Attractive Valuation

Vascon Engineers, a smallcap company in the capital goods industry, has recently received a 'Hold' rating from MarketsMOJO on September 10, 2024. This upgrade is based on the company's healthy long-term growth, with an annual operating profit growth rate of 94.46%.
Technically, the stock is currently in a Mildly Bullish range, showing improvement from its previous Mildly Bearish trend on August 19, 2024. The stock has also generated a return of -6.09% since then. Additionally, the key technical factor KST has been Bullish since August 19, 2024.

Attractive valuation is another factor contributing to the 'Hold' rating, with a ROCE of 5.1 and an enterprise value to capital employed ratio of 1.5. However, the stock is currently trading at a premium compared to its average historical valuations.

Despite generating a return of 17.45% in the past year, the company's profits have fallen by -34.7%. This can be attributed to poor management efficiency, with a low ROCE of 3.08%. This signifies low profitability per unit of total capital (equity and debt).

Furthermore, Vascon Engineers has declared negative results for the last three consecutive quarters, with a -43.5% decrease in PAT(Q) at Rs 9.60 crore and a lowest DEBTORS TURNOVER RATIO(HY) of 3.89 times. The company's interest expenses have also been the highest at Rs 5.48 crore.

Investors should also take note that 27.89% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. In the last year, Vascon Engineers has underperformed the market, with a return of 17.45% compared to the market's (BSE 500) return of 34.61%.

Based on these factors, MarketsMOJO has upgraded the stock to a 'Hold' rating. However, investors should carefully consider the company's financial performance and management efficiency before making any investment decisions.