Pakka receives 'Hold' rating from MarketsMOJO, shows strong short-term performance but concerns remain

Pakka, a smallcap company in the paper and paper products industry, has recently received a 'Hold' rating from MarketsMOJO on February 19, 2024. This upgrade comes as the stock has shown a bullish trend and has improved from a mildly bullish status on the same date.
The company has also shown strong performance in the long term as well as the near term, with a return of 231.52% in the last year and outperforming the BSE 500 index in the last 3 years, 1 year, and 3 months.

However, the company has also faced some challenges, with a poor long-term growth rate of 17.06% in operating profit over the last 5 years. In addition, the company declared negative results in December 2023 after 11 consecutive positive quarters, with a fall in PAT(Q) at Rs 9.91 crore and a decrease in NET SALES(Q) and PBDIT(Q).

Furthermore, the company's valuation is considered to be very expensive with a ROCE of 26.6 and an enterprise value to capital employed ratio of 4.9. The stock is also trading at a premium compared to its historical valuations.

Another concern for investors is that 84.99% of the promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets.

Overall, while Pakka has shown strong performance in the short term, its long-term growth and valuation may be cause for concern. Investors are advised to hold onto their positions for now and monitor the company's performance closely.