Nettlinx receives 'Hold' rating from MarketsMOJO based on positive financial results

Nettlinx, a microcap IT software company, has recently received a 'Hold' rating from MarketsMOJO on April 9, 2024. This upgrade is based on the company's positive financial results for the last three consecutive quarters. The company's PAT (HY) has increased to Rs 2.86 crore and its net sales (Q) have grown by 27.9%. Additionally, the stock is currently in a bullish range and its technical trend has improved from mildly bullish to bullish.
However, despite these positive indicators, Nettlinx has weak long-term fundamental strength with a -142.20% CAGR growth in operating profits over the last five years. The company's return on equity (avg) is also low at 5.61%, indicating low profitability per unit of shareholders' funds. Furthermore, with a ROCE of 8.2, the stock is considered to be very expensive with a 5.4 enterprise value to capital employed.

Moreover, the stock is currently trading at a discount compared to its average historical valuations. While it has generated a return of 24.45% in the past year, its profits have risen by 520%, resulting in a PEG ratio of 0.1. This suggests that the stock may be undervalued.

In addition, there has been a decrease in promoter confidence as they have reduced their stake in the company by -2.09% over the previous quarter. Currently, promoters hold 58.71% of the company, which may signify reduced confidence in the future of the business.

Lastly, Nettlinx has underperformed the market in the last year, generating a return of 24.45% compared to the market's (BSE 500) return of 39.93%. While the company has shown positive results in the recent quarters, its weak long-term fundamentals and decreasing promoter confidence may be a cause for concern for investors. Therefore, MarketsMOJO has upgraded the stock to a 'Hold' rating, suggesting a cautious approach for potential investors.