Samhi Hotels receives 'Hold' rating after strong quarterly results.

Samhi Hotels, a smallcap company in the hotel, resort, and restaurant industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared outstanding results for the quarter ending September 2024, with a growth in net profit of 198.35%. This is the fourth consecutive quarter of positive results for the company.
One of the key factors contributing to the 'Hold' rating is the company's strong operating cash flow, which was the highest at Rs 274.69 crore. Additionally, the net sales for the half year ending September 2024 have grown at a rate of 25.59%, and the operating profit to interest ratio is at its highest at 1.64 times.

Technically, the stock is in a mildly bullish range and has shown improvement from a sideways trend on 12-Nov-24. The DOW and OBV technical factors are also mildly bullish, indicating a positive trend for the stock.

However, there are some concerns regarding the company's long-term fundamental strength. The average return on capital employed (ROCE) is at a weak 5.07%, and the operating profit has only grown at an annual rate of 8.04% over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 7.41 times, indicating a low ability to service debt.

The stock also has an expensive valuation with a 2 enterprise value to capital employed. While the stock has generated a return of 16.95% in the past year, its profits have only risen by 55%. This underperformance in the market is a cause for concern.

It is worth noting that Samhi Hotels has a high institutional holding of 78.05%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

In conclusion, while Samhi Hotels has shown strong performance in the recent quarter, there are some concerns regarding its long-term growth and ability to service debt. The 'Hold' rating from MarketsMOJO suggests a neutral stance on the stock, and investors should carefully consider these factors before making any investment decisions.