Oriental Aromatics Downgraded to 'Hold' by MarketsMOJO: Debt Servicing and Technical Performance Key Factors

Oriental Aromatics, a smallcap company in the chemicals industry, has recently been downgraded to a 'Hold' by MarketsMOJO on November 11, 2024. This decision was based on various factors, including the company's ability to service its debt, its recent financial results, and its technical performance. One of the main reasons for the downgrade is the company's low Debt to EBITDA ratio of 1.48 times, indicating a strong ability to service its debt. Additionally, Oriental Aromatics has shown a growth in Operating Profit of 1497.32% and has declared positive results for the last two consecutive quarters. Its highest OPERATING CF(Y) at Rs 141.80 Cr and PBDIT(Q) at Rs 22.11 cr also reflect a positive trend. However, the company's long-term growth has been poor, with an annual rate of -14.73% over the last 5 years. This, coupled with a ROCE of 3.3 and an expensive valuation with a 2.4 Enterprise value to Capital Employed, may have contributed to the downgrade. On the technical side, the stock is currently in a Mildly Bullish range and has shown multiple bullish indicators such as MACD, KST, and OBV. It has also outperformed the market (BSE 500) with a return of 54.70% in the last year. Despite its recent positive performance, the stock is currently trading at a discount compared to its average historical valuations. This, along with the fact that domestic mutual funds hold only 0% of the company, may suggest that they are not comfortable with the current price or the business. As a smallcap company, Oriental Aromatics may benefit from more in-depth research by domestic mutual funds in the future.