Sangal Papers Receives 'Hold' Rating Amid Bullish Trend and Attractive Valuations

Sangal Papers, a microcap company in the paper and paper products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the stock has shown a bullish trend and has improved from a mildly bullish status on August 13, 2024. The technical indicators such as MACD, Bollinger Band, and KST are all pointing towards a bullish outlook for the stock.
One of the main reasons for the 'Hold' rating is the attractive valuation of the company, with a ROCE of 7.5 and an enterprise value to capital employed ratio of 0.8. Additionally, 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 56.28% in the past year, its profits have decreased by -26.9%.

On a positive note, Sangal Papers has consistently delivered returns over the last 3 years, outperforming the BSE 500 index. However, the company's long-term fundamental strength is weak, with an average ROCE of 7.58% and poor growth in net sales and operating profit over the last 5 years. Furthermore, the company has a high debt to EBITDA ratio of 3.93 times, indicating a low ability to service debt.

In the latest quarter, the company's net sales were at a low of Rs 42.61 crore. Additionally, 38.76% of the promoter shares are pledged, which can put downward pressure on the stock prices in falling markets. Overall, while Sangal Papers has shown a bullish trend and has attractive valuations, its long-term fundamental strength and high promoter pledged shares should be considered before making any investment decisions.