Oriental Aromatics Receives Upgraded 'Buy' Rating and Shows Impressive Growth in Operating Profit

Oriental Aromatics, a smallcap company in the chemicals industry, has recently caught the attention of investors with its upgraded 'Buy' rating by MarketsMOJO on October 1, 2024.
The company's strong ability to service debt, with a low Debt to EBITDA ratio of 1.48 times, is one of the main reasons for the upgrade. Additionally, Oriental Aromatics has shown impressive growth in its Operating Profit, with a 1497.32% increase in Jun 24. This positive trend has continued for the last two consecutive quarters, with the company's OPERATING CF(Y) at its highest at Rs 141.80 Cr and PBDIT(Q) at Rs 22.11 cr. Furthermore, the OPERATING PROFIT TO NET SALES(Q) is also at its highest at 10.25%.

From a technical standpoint, the stock is currently in a Bullish range and the technical trend has improved from Mildly Bullish on October 1, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, also indicate a bullish outlook for the stock.

However, there are some risks to consider when investing in Oriental Aromatics. The company has shown poor long-term growth, with an annual rate of -31.54% in Operating Profit over the last 5 years. Additionally, with a ROCE of 3.3, the stock is considered to have an expensive valuation with a 2.3 Enterprise value to Capital Employed. However, it is currently trading at a discount compared to its average historical valuations.

Despite its recent success, Oriental Aromatics still has room for improvement. While the stock has generated a return of 42.65% in the past year, its profits have only risen by 394.9%, resulting in a low PEG ratio of 0.2. Furthermore, domestic mutual funds hold only 0% of the company, which may indicate a lack of confidence in the stock or the business.

In conclusion, Oriental Aromatics has shown promising growth and potential, but investors should carefully consider the risks before making any investment decisions. With its upgraded 'Buy' rating and positive financial results, the company is definitely one to watch in the chemicals industry.