Nettlinx receives 'Hold' rating from MarketsMOJO, shows positive results in recent quarters

Nettlinx, a microcap IT software company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company has shown positive results for the last three consecutive quarters. Its PAT (HY) has increased to Rs 2.86 crore and its net sales (Q) have grown by 27.9%. The stock is currently in a bullish range and its technical trend has improved from mildly bullish to bullish on 20-Feb-24. Factors such as Bollinger Band, KST, and OBV also indicate a bullish trend for the stock.
However, the company's long-term fundamental strength is weak with a -142.20% CAGR growth in operating profits over the last five years. Its return on equity (avg) is also low at 5.61%, indicating low profitability per unit of shareholders' funds. Additionally, with a ROCE of 8.2, the stock is currently very expensive with a 4.6 enterprise value to capital employed. However, it is currently trading at a discount compared to its average historical valuations.

In the past year, while the stock has generated a return of 5.69%, its profits have risen by 520%. This gives the company a PEG ratio of 0.1, indicating that it is undervalued. However, there has been a decrease in promoter confidence as they have reduced their stake in the company by -2.09% over the previous quarter and currently hold 58.71% of the company. This decrease in stake may signify reduced confidence in the future of the business.

Overall, Nettlinx has underperformed the market in the last year with a return of 5.69%, much lower than the market (BSE 500) returns of 34.87%. While the company has shown positive results in the last few quarters, its weak long-term fundamental strength and decreasing promoter confidence may be a cause for concern. Investors are advised to hold onto their stocks for now and monitor the company's performance closely.