Oriental Aromatics: A Smallcap Company with Strong Financial Performance and Recent Stock Upgrade to 'Buy'

Oriental Aromatics, a smallcap company in the chemicals industry, has recently caught the attention of investors with its strong financial performance. MarketsMOJO has upgraded its stock call to 'Buy' on October 18, 2024.
One of the main reasons for this upgrade is the company's ability to service its debt, with a low Debt to EBITDA ratio of 1.48 times. This indicates a strong financial position and stability for the company. Additionally, Oriental Aromatics has shown a remarkable growth in its Operating Profit, with a 1497.32% increase in the last quarter of June 2024. This positive trend has continued for the past two consecutive quarters, with a PAT(Q) growth of 281.5% and an OPERATING CF(Y) of Rs 141.80 Cr.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on October 18, 2024. Multiple factors such as MACD, Bollinger Band, and KST also indicate a bullish outlook for the stock.

In terms of market performance, Oriental Aromatics has outperformed the market (BSE 500) with a return of 48.47% in the last year, compared to the market's return of 34.39%.

However, there are some risks to consider when investing in Oriental Aromatics. The company has shown poor long-term growth, with an annual growth rate of -14.73% in Operating Profit over the last 5 years. Additionally, with a ROCE of 3.3, the stock is currently trading at an expensive valuation with a 2.5 Enterprise value to Capital Employed. However, it is worth noting that the stock is currently trading at a discount compared to its average historical valuations.

Furthermore, despite its strong financial performance, domestic mutual funds hold only 0% of the company's shares. This could indicate that they are either not comfortable with the current price or have not conducted in-depth research on the company.

In conclusion, Oriental Aromatics has shown a strong financial performance and has caught the attention of investors with its recent stock upgrade to 'Buy'. However, it is important to consider the risks involved before making any investment decisions.