Nahar Spinning Mills receives 'Hold' rating after positive results, but long-term concerns remain

Nahar Spinning Mills, a microcap textile company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared positive results in June 2024, breaking a streak of 7 consecutive negative quarters. The company's operating profit to interest ratio is at a high of 2.47 times, while its PAT has grown by 137.9% to Rs 6.64 crore. Additionally, its PBDIT is at a record high of Rs 51.21 crore.
Technically, the stock is in a mildly bullish range and has shown improvement from a sideways trend on October 30, 2024. The MACD and OBV technical factors also indicate a bullish trend. With a ROCE of -0.3, the stock is attractively valued with an enterprise value to capital employed ratio of 0.8. It is currently trading at a discount compared to its average historical valuations. However, in the past year, the stock has generated a return of -3.89%, while its profits have fallen by -201.6%.

The majority shareholders of Nahar Spinning Mills are the promoters. The company has weak long-term fundamental strength with a -24.92% CAGR growth in operating profits over the last 5 years. It also has a high debt to EBITDA ratio of 7.51 times, indicating a low ability to service debt. The return on equity (average) is at 8.66%, signifying low profitability per unit of shareholders' funds.

In the last 3 years, Nahar Spinning Mills has consistently underperformed against the benchmark. Along with generating -3.89% returns in the last year, the stock has also underperformed BSE 500 in each of the last 3 annual periods. While the company has shown positive results in the recent quarter, its long-term performance and financial health may be a cause for concern. Investors are advised to hold their positions and monitor the company's progress closely.