Menon Bearings Receives 'Hold' Rating from MarketsMOJO, Shows Mixed Performance

Menon Bearings, a microcap company in the auto ancillary industry, has recently received a 'Hold' rating from MarketsMOJO on June 25, 2024. This upgrade is based on several factors that indicate a neutral stance on the stock.

One of the key reasons for the 'Hold' rating is the company's strong ability to service its debt. With a low Debt to EBITDA ratio of 0.54 times, Menon Bearings has a good financial standing. Additionally, the stock is currently in a Mildly Bullish range, with the technical trend improving from Mildly Bearish on June 24, 2024. This has resulted in a 3.91% return since then. Another positive technical factor is the Bullish Bollinger Band, which has been in place since June 24, 2024.

However, the company's long-term growth has been poor, with Net Sales growing at an annual rate of 3.59% and Operating profit at 5.47% over the last 5 years. In the recent quarter, the company's profits have also declined, with PAT(HY) at Rs 11.09 crore, showing a growth of -34.03%. Furthermore, with a ROE of 17.6, the stock is currently trading at a Very Expensive valuation with a 5.7 Price to Book Value. However, it is worth noting that the stock is currently trading at a discount compared to its average historical valuations.

In the past year, Menon Bearings has generated a return of 13.05%, which is significantly lower than the market (BSE 500) returns of 39.00%. This underperformance may be attributed to the fact that domestic mutual funds hold only 0% of the company. This is surprising, considering that domestic mutual funds have the capability to conduct in-depth research on companies. This small stake may indicate that they are either not comfortable with the current price or the business itself.

In conclusion, while Menon Bearings has received a 'Hold' rating from MarketsMOJO, the stock has both positive and negative factors to consider. With a strong ability to service debt and a Bullish technical trend, the stock may be worth holding onto. However, poor long-term growth and underperformance in the market may be a cause for concern.