Oriental Aromatics Downgraded to 'Hold' by MarketsMOJO: A Closer Look at the Company's Financial Performance and Technical Indicators.

Oriental Aromatics, a smallcap company in the chemicals industry, has recently been downgraded to a 'Hold' by MarketsMOJO on September 11, 2024. This decision was based on the company's financial performance and technical indicators.
One of the reasons for the downgrade is the company's strong ability to service debt, with a low Debt to EBITDA ratio of 1.48 times. This indicates that the company is in a good position to manage its debt obligations.

In terms of financial results, Oriental Aromatics declared very positive results in June 2024, with a growth in Operating Profit of 1497.32%. The company has also shown positive results for the last two consecutive quarters, with the highest Operating Cash Flow of Rs 141.80 Cr and PBDIT of Rs 22.11 Cr. Additionally, the company's Operating Profit to Net Sales ratio is at its highest at 10.25%.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend.

However, the company's long-term growth has been poor, with an annual growth rate of -31.54% in Operating Profit over the last 5 years. This could be a cause for concern for investors.

Furthermore, with a ROCE of 3.3, the company's valuation is considered expensive, with an Enterprise value to Capital Employed ratio of 2.3. However, the stock is currently trading at a discount compared to its average historical valuations.

Despite generating a return of 32.72% in the past year, Oriental Aromatics' profits have only risen by 394.9%, resulting in a low PEG ratio of 0.2. This could indicate that the stock is undervalued.

It is also worth noting that despite being a smallcap company, domestic mutual funds hold only 0% of Oriental Aromatics. This could suggest that they are either not comfortable with the current price or have not conducted in-depth research on the company.

In conclusion, while Oriental Aromatics has shown positive financial results and technical indicators, its long-term growth and valuation may be a cause for concern. Investors should carefully consider these factors before making any investment decisions.