Nilkamal Upgraded to 'Hold' Rating by MarketsMOJO, Strong Debt Servicing and Attractive Valuation

Nilkamal, a smallcap company in the plastic products industry, has recently been upgraded to a 'Hold' rating by MarketsMOJO on April 22, 2024. This upgrade is based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 0.59 times. Additionally, the company has a Very Attractive valuation with a ROCE of 11.5 and an Enterprise value to Capital Employed ratio of 1.8.
Despite these positive factors, the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of -2.53%, but its profits have increased by 27.6%. The PEG ratio of the company is also at a favorable level of 0.7.

One concern for investors is the company's poor long-term growth, with Net Sales growing at an annual rate of 8.94% and Operating profit at 4.76% over the last 5 years. In addition, the company's results for December 2023 showed a decline in PBT LESS OI(Q) at Rs 35.76 crore and PAT(Q) at Rs 29.30 crore, both falling by -11.49% and -11.7%, respectively. The DEBTORS TURNOVER RATIO(HY) is also at its lowest level of 7.15 times.

From a technical standpoint, the stock is currently in a Mildly Bearish range, with the key technical factor KST being Bearish since April 22, 2024. Furthermore, the company has consistently underperformed against the benchmark over the last 3 years, with -2.53% returns in the last 1 year and underperformance against BSE 500 in each of the last 3 annual periods.

It is worth noting that the company has a high institutional holding of 21.25%, indicating that these investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors. Overall, while Nilkamal may have some positive aspects, it is important for investors to carefully consider all factors before making any investment decisions.