Parag Milk Foods Receives 'Hold' Rating After Strong Q1 Results

Parag Milk Foods, a smallcap FMCG company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported positive results in the quarter ending June 2024. The PBT LESS OI(Q) has grown by an impressive 135.77%, while the ROCE(HY) has reached its highest at 10.29%. Additionally, the company's DEBT-EQUITY RATIO(HY) is at its lowest at 0.71 times.
Technically, the stock is in a Mildly Bullish range and has shown improvement since November 8, 2024, generating a return of 1.38%. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock.

At a ROCE of 8.8, Parag Milk Foods is currently trading at a Very Attractive valuation with a 2.1 Enterprise value to Capital Employed. The stock is also trading at a discount compared to its average historical valuations. Despite generating a return of -4.02% in the past year, the company's profits have increased by 49.8%, resulting in a low PEG ratio of 0.6.

However, the company's long-term fundamental strength is weak with a -2.62% CAGR growth in Operating Profits over the last 5 years. Its ability to service its debt is also poor with a low EBIT to Interest (avg) ratio of 0.31. The Return on Equity (avg) of 5.81% also signifies low profitability per unit of shareholders' funds.

It is worth noting that despite being a smallcap company, domestic mutual funds hold only 0.06% of the company. This could indicate that they are either not comfortable with the current price or have not conducted in-depth research on the company.

In the last 1 year, Parag Milk Foods has underperformed the market (BSE 500) with negative returns of -4.02%, while the market has generated returns of 30.30%. This could be a cause for concern for potential investors. However, with the recent positive results and bullish technical indicators, the stock could be a good hold for now.