Parag Milk Foods Receives Upgraded Stock Call, Showing Positive Growth in Recent Results

Parag Milk Foods, a smallcap FMCG company, has recently received an upgraded stock call from MarketsMOJO. The stock is now rated as 'Hold' based on its positive results in June 2024. The company has shown significant growth in its PBT LESS OI(Q) at Rs 21.29 crore, which has increased by 135.77%. Additionally, its ROCE(HY) has reached its highest at 10.29%, while its 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 from its previous Mildly Bearish trend on 30-Oct-24. Multiple factors such as MACD, Bollinger Band, KST, and OBV are all indicating a bullish trend for the stock.

With a ROCE of 8.8, the stock is currently trading at a Very Attractive valuation with a 2 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. Despite generating a return of -0.44% in the past year, the company's profits have increased by 49.8%, resulting in a low PEG ratio of 0.5.

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 company's Return on Equity (avg) is at 5.81%, indicating 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 signify that either they are not comfortable with the current price or they 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 -0.44%, while the market has generated returns of 34.53%. This could be a cause for concern for potential investors.

Overall, while the stock has shown positive growth in its recent results, its long-term fundamental strength and underperformance in the market may be a cause for caution. Investors are advised to do their own research and analysis before making any investment decisions.