Neuland Laboratories downgraded to 'Hold' by MarketsMOJO due to strong debt management and fair valuation

Neuland Laboratories, a midcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 7, 2024. This decision was based on various factors, including the company's ability to service its debt, long-term growth potential, and recent financial results.
One of the main reasons for the 'Hold' rating is the company's strong ability to service its debt, with a low Debt to EBITDA ratio of 1.17 times. This indicates that the company is in a good financial position and can manage its debt effectively.

Moreover, Neuland Laboratories has shown healthy long-term growth, with its operating profit growing at an annual rate of 64.78%. The company has also declared positive results for the last 8 consecutive quarters, with its highest operating cash flow at Rs 261.18 crore and a 30.68% growth in profits in the last 9 months.

In terms of technical analysis, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. Additionally, the company has a high institutional holding of 32.52%, which suggests that these investors have better capabilities and resources to analyze the company's fundamentals.

Neuland Laboratories has also consistently generated returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. However, with a ROE of 23.4, the stock is currently trading at a very expensive valuation with a 11.4 Price to Book Value. This indicates that the stock is trading at a fair value compared to its average historical valuations.

Overall, while the stock has generated a return of 189.44% in the last year, its profits have risen by 48.8%, resulting in a PEG ratio of 0.9. This suggests that the stock is currently trading at a fair value and may not have much potential for future growth. Hence, MarketsMOJO has downgraded the stock to a 'Hold' for now.