Rajapalayam Mills Receives 'Hold' Rating from MarketsMOJO, Promoters Show Confidence in Company

Rajapalayam Mills, a microcap textile company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the company's healthy long-term growth, technical indicators showing a mildly bullish trend, and attractive valuation with a low enterprise value to capital employed ratio.
One of the key factors contributing to the 'Hold' rating is the company's strong operating profit growth, which has seen an annual increase of 58.69%. Additionally, technical indicators such as MACD, Bollinger Band, and KST are all showing bullish signals for the stock.

Moreover, the company's promoters have shown high confidence in the business by increasing their stake by 0.85% in the previous quarter, bringing their total ownership to 56.27%. This is a positive sign for the future of the company.

In terms of market performance, Rajapalayam Mills has outperformed the market (BSE 500) with a return of 63.63% in the last year, compared to the market's return of 38.02%.

However, the company's management efficiency is a cause for concern, with a low return on capital employed (ROCE) of 1.28%. This signifies low profitability per unit of total capital, including equity and debt. The company also has a high debt to EBITDA ratio of 13.05 times, indicating a low ability to service debt.

Furthermore, the company has declared negative results for the last six consecutive quarters, with a fall in net sales of -8.95%. The net profit after tax has also fallen by -111.6%, with the highest interest expense of Rs 20.98 crore.

In conclusion, while Rajapalayam Mills has shown strong long-term growth and market-beating performance, its management efficiency and recent negative results are areas of concern. Investors may want to hold onto their positions for now and monitor the company's performance closely.