S H Kelkar & Company downgraded to 'Hold' by MarketsMOJO, short-term growth positive but long-term concerns arise

S H Kelkar & Company, a smallcap company in the chemicals industry, has recently been downgraded to a 'Hold' by MarketsMOJO on November 12, 2024. This decision was based on various factors, including the company's low Debt to Equity ratio of 0.43 times, which is below the industry average.
However, the company has shown positive results in the last three consecutive quarters, with a significant growth in PAT (HY) at Rs 69.19 crore, which has increased by 131.32%. The company's ROCE (HY) is also at its highest at 11.94%, while its Debt-Equity ratio (HY) is at its lowest at 0.55 times.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Additionally, with a ROCE of 12.3, the stock is currently trading at a Very Attractive valuation with a 2.6 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations.

In the past year, the stock has generated a return of 94.16%, outperforming the BSE 500. However, the company's long-term growth has been poor, with Net Sales growing at an annual rate of 12.35% and Operating profit at 0.31% over the last five years.

Moreover, there has been a decrease in promoter confidence, as they have reduced their stake in the company by -3.12% over the previous quarter and currently hold 55.63% of the company. This decrease in stake may signify reduced confidence in the future of the business.

Overall, while S H Kelkar & Company has shown positive results in the short term, its long-term growth and decreasing promoter confidence may be a cause for concern. Investors are advised to hold their positions and monitor the company's performance closely.