Ramky Infrastructure Receives 'Hold' Rating Amid Bullish Trend and Attractive Valuations

Ramky Infrastructure, a midcap company in the capital goods industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the stock has shown a bullish trend and has improved technically from mildly bullish to a bullish range on September 5th, 2024.
One of the key factors contributing to this upgrade is the company's attractive valuation with a ROCE of 19.3 and an enterprise value to capital employed ratio of 2.4. Additionally, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, the stock has generated a return of 33.75%, while its profits have risen by 56.3%. This is reflected in the company's low PEG ratio of 0.3.

However, there are some concerns about the company's long-term fundamental strength. With a high debt to equity ratio of 4.59 times and poor long-term growth as net sales have only grown by an annual rate of 1.54% over the last 5 years, the company's long-term prospects may be weak. The return on equity (avg) of 3.50% also indicates low profitability per unit of shareholders' funds.

In the latest quarter, the company's results have been flat with a decrease in PBT LESS OI(Q) at Rs 74.68 crore, a decrease of -29.33%, and a decrease in PAT(Q) at Rs 67.58 crore, a decrease of -33.3%. The company's cash and cash equivalents (HY) are also at their lowest at Rs 152.55 crore.

Another concern for investors is that 25.7% of the promoter shares are pledged. In a falling market, this can put additional downward pressure on the stock prices.

In conclusion, while Ramky Infrastructure's stock has shown a bullish trend and has attractive valuations, there are some concerns about the company's long-term fundamental strength and high promoter pledged shares. Investors may want to hold off on investing in this midcap company until there is more clarity on these issues.