Nitta Gelatin India: A Microcap Company with Strong Financial Performance and Attractive Valuation

Nitta Gelatin India, a microcap company in the chemicals industry, has recently been downgraded to a 'Hold' by MarketsMOJO on February 5th, 2024. This decision was based on various factors, including the company's low Debt to Equity ratio of 0.40 times, indicating a healthy financial position.
One of the key strengths of Nitta Gelatin India is its consistent long-term growth, with an annual operating profit growth rate of 60.09%. The company has also declared positive results for the last 8 consecutive quarters, with its PAT (HY) growing at an impressive rate of 81.69% and its operating cash flow (Y) reaching a high of Rs 101.04 crore. Additionally, the company's ROCE (HY) is at its highest at 39.01%, further highlighting its strong financial performance.

From a technical standpoint, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Furthermore, with an ROE of 29.8 and a price to book value of 3, the stock is considered to be attractively valued. It is also trading at a discount compared to its historical valuations, making it an appealing option for investors.

Over the past year, Nitta Gelatin India's stock has generated a return of 73.08%, while its profits have risen by 78.4%. This is reflected in the company's low PEG ratio of 0.1, indicating that the stock is undervalued compared to its growth potential.

Another positive aspect of the company is its consistent returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. However, despite its strong performance, domestic mutual funds hold only 0.18% of the company, which could suggest that they are either not comfortable with the current price or have not conducted in-depth research on the company due to its microcap size.

In conclusion, while Nitta Gelatin India has shown strong financial performance and is attractively valued, the lack of interest from domestic mutual funds may be a cause for concern. Investors should carefully consider these factors before making any investment decisions.