Radhika Jeweltech downgraded to 'Hold' by MarketsMOJO, short-term growth but long-term concerns

Radhika Jeweltech, a microcap company in the jewellery industry, has recently been downgraded to a 'Hold' by MarketsMOJO on June 6, 2024. This decision was based on the company's low Debt to Equity ratio, which is at an average of 0.05 times.
However, the company has shown positive results in the last four consecutive quarters, with a growth in Net Profit of 114.21% in March 2024. The company's PBT LESS OI(Q) has also grown at 110.91%, while PAT(Q) has grown at 114.2% and NET SALES(Q) at 54.25%.

Technically, the stock is in a Mildly Bullish range and has shown improvement since May 2, 2024, with a return of -3.05%. The MACD and KST technical factors are also Bullish.

With a ROCE of 21.6, the company has a fair valuation and a 2.5 Enterprise value to Capital Employed. However, the stock is currently trading at a premium compared to its historical valuations.

In the past year, the stock has outperformed the market (BSE 500) with a return of 72.57%, while its profits have risen by 66.8%. This gives the company a PEG ratio of 0.2, indicating a market-beating performance.

On the other hand, the company has shown poor long-term growth, with Net Sales growing at an annual rate of 52.88% and Operating profit at 13.15% over the last 5 years.

Despite its size, domestic mutual funds hold only 0% of the company, which could suggest that they are not comfortable with the price or the business. However, domestic mutual funds have the capability to conduct in-depth research on companies, making their small stake a potential red flag.

Overall, while Radhika Jeweltech has shown positive results in the short term, its long-term growth and lack of interest from domestic mutual funds may be a cause for concern. Investors are advised to hold onto their stocks for now and keep an eye on the company's future performance.