Reliance Infrastructure Receives 'Hold' Rating from MarketsMOJO Based on Technical Factors and Attractive Valuation

Reliance Infrastructure, a midcap company in the power industry, has recently received a 'Hold' rating from MarketsMOJO on April 10, 2024. This upgrade is based on various technical factors, such as the stock being in a bullish range and showing improvement in trends since March 18, 2024, with a return of -11.05%. Additionally, indicators like MACD, KST, and OBV are also showing bullish signals for the stock.
One of the main reasons for the 'Hold' rating is the attractive valuation of the company, with a ROCE of -1.2 and an enterprise value to capital employed ratio of 1. This indicates that the stock is currently trading at a discount compared to its historical valuations. However, it is important to note that while the stock has generated a return of 54.96% in the past year, its profits have fallen by -55.6%.

On the positive side, Reliance Infrastructure has consistently outperformed the BSE 500 index in the last 3 annual periods, with a return of 54.96%. However, the company's long-term fundamental strength is weak, with a -159.37% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 17.95 times, indicating a low ability to service debt. The return on equity (avg) of 6.83% also signifies low profitability per unit of shareholders' funds.

In terms of recent financial results, the company's profits have fallen by -83.1% in the quarter ending December 2023, with a decrease in net sales by -11.2%. This could be a cause for concern for investors.

It is also worth noting that despite being a midcap company, domestic mutual funds hold only 0.09% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

Overall, while Reliance Infrastructure may have some positive technical indicators and a discount in valuation, its weak long-term fundamentals and recent financial results may warrant a 'Hold' rating for now. Investors should carefully consider all factors before making any investment decisions.