Responsive Industries Downgraded to 'Hold' Despite Strong Financial Performance

Responsive Industries, a midcap company in the plastic products industry, has recently been downgraded to a 'Hold' by MarketsMOJO on May 7, 2024. This decision was based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 1.21 times.
Despite this, the company has shown positive results in the last 5 consecutive quarters, with a growth in net profit of 9.93% in December 2023. In fact, Responsive Industries has the highest operating profit to interest ratio at 12.51 times and the highest PBDIT at Rs 66.45 crore. Its operating profit to net sales ratio is also the highest at 24.86%.

Technically, the stock is in a mildly bullish range and its MACD and KST technical factors are also bullish. Additionally, the company has a high institutional holding of 38.66%, indicating that these investors have better capability and resources to analyze the fundamentals of companies compared to retail investors.

Responsive Industries has also shown market-beating performance, generating a return of 90.98% in the last year, which is significantly higher than the market (BSE 500) returns of 34.08%. However, with a ROCE of 10.5, the stock has a very expensive valuation with a 6.5 Enterprise value to Capital Employed.

Despite trading at a discount compared to its average historical valuations, the stock's profits have risen by a staggering 13716% in the past year. Overall, while Responsive Industries may not be a strong buy at the moment, it is still a company worth keeping an eye on for potential future growth.