MarketsMOJO upgrades Welcast Steels to 'Hold' after consecutive positive quarters

Welcast Steels, a microcap company in the iron and steel industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared positive results for the last three consecutive quarters.
In the half-year period, Welcast Steels saw a higher profit after tax of Rs 2.58 crore and its PBDIT (profit before depreciation, interest, and taxes) reached its highest at Rs 1.40 crore. The company's net sales for the nine-month period also showed an increase, reaching Rs 71.69 crore.

Technically, the stock is in a mildly bullish range with multiple factors such as RSI, MACD, and KST indicating a bullish trend. Additionally, with a return on equity of 13, the company's valuation is attractive with a price to book value of 2.1. The stock is also currently trading at a discount compared to its historical valuations.

Over the past year, Welcast Steels has outperformed the market with a return of 82.11%, while its profits have risen by 99.2%. This is reflected in the company's low PEG ratio of 0.2.

The majority shareholders of Welcast Steels are its promoters, indicating their confidence in the company's performance. The stock has also shown a market-beating performance, with a return of 82.11% in the last year, compared to the market's return of 32.70% (BSE 500).

However, the company's long-term fundamental strength is weak, with a negative CAGR growth of -20.09% in net sales over the last five years. Additionally, its ability to service its debt is poor, with a low EBIT to interest ratio of 0. This signifies low profitability per unit of shareholders' funds, with a return on equity of only 2.54%.

Overall, while Welcast Steels has shown positive results in the short term, its long-term performance and fundamental strength may be a cause for concern. Investors are advised to hold onto their stocks for now and monitor the company's performance closely.