Organic Coatings Receives 'Hold' Rating from MarketsMOJO After Record Breaking Quarter

Organic Coatings, a microcap company in the dyes and pigments industry, has recently received a 'Hold' rating from MarketsMOJO on October 1, 2024. This upgrade comes after the company reported positive results in the quarter ending June 2024, with its net sales reaching a record high of Rs 13.06 crore and PBDIT at Rs 0.80 crore. Additionally, the company's PBT less OI also saw a significant increase, reaching Rs 0.24 crore.
Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on October 1, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, indicate a bullish outlook for the stock.

With a ROCE of 6.1, the company is fairly valued with an enterprise value to capital employed ratio of 2.2. Moreover, 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 133.42%, while its profits have increased by 102.6%. The PEG ratio of the company stands at 0.1, indicating a potential for future growth.

The majority shareholders of Organic Coatings are its promoters, which is a positive sign for investors. The company has also shown market-beating performance in the long term, outperforming BSE 500 in the last 3 years, 1 year, and 3 months.

However, the company's high debt, with a debt-to-equity ratio of 8.22 times, is a cause for concern and indicates weak long-term fundamental strength. The company has also shown poor long-term growth, with net sales and operating profit growing at an annual rate of -1.36% and 0%, respectively, over the last 5 years. The average debt-to-equity ratio of the company is 0 times.

Overall, while Organic Coatings has shown strong performance in the short term and has potential for future growth, its high debt and weak long-term growth may be a cause for caution for investors.