Nettlinx Receives 'Hold' Rating After Impressive Q1 Results, But Long-Term Fundamentals Raise Concerns

Nettlinx, a microcap IT software company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported outstanding results for the quarter ending in March 2024, with a growth in net profit of 194.92%. This marks the fourth consecutive quarter of positive results for Nettlinx.
The company's net sales have also seen a significant growth of 80.3% in the last quarter, while PBT LESS OI and PAT have grown at 241.7% and 192.8%, respectively. These strong financial numbers have led to a mildly bullish technical trend for the stock, with the RSI turning bullish on July 15, 2024.

However, Nettlinx's long-term fundamental strength is weak, with a -142.20% CAGR growth in operating profits over the last 5 years. The company's return on equity (avg) is also low at 5.61%, indicating low profitability per unit of shareholders' funds. Additionally, the stock is currently trading at an expensive valuation with a 3.9 enterprise value to capital employed.

Furthermore, the company's promoters have decreased their stake by -1.59% in the previous quarter, which may suggest a lack of confidence in the future of the business. Nettlinx has also underperformed the market in the last year, with a return of only 10.17% compared to the BSE 500 index's return of 37.76%.

In conclusion, while Nettlinx has shown strong financial performance in the last quarter, its long-term fundamentals and promoter confidence may be cause for concern. Investors are advised to hold onto their positions for now and monitor the company's performance closely.