Scan Steels Downgraded to 'Hold' by MarketsMOJO Due to Mixed Financial Results

Scan Steels, a microcap company in the iron and steel industry, has recently been downgraded to a 'Hold' by MarketsMOJO on July 24, 2024. This decision was based on the company's latest financial results and market performance.
While Scan Steels showed a significant growth in net profit of 416.56% in March 2024, its operating profit to interest ratio was the highest at 6.61 times and its PBDIT was also the highest at Rs 16.19 crore. However, its operating profit to net sales ratio was also the highest at 6.30%, indicating a strong performance in the quarter.

Despite these positive results, MarketsMOJO has downgraded the stock to a 'Hold' due to several factors. Firstly, the company's ROCE (Return on Capital Employed) is at 6.9, which is considered attractive, but its enterprise value to capital employed ratio is at 0.9, indicating a discount compared to its historical valuations.

Moreover, while the stock has generated a return of 54.30% in the past year, its profits have only risen by 15.7%, resulting in a PEG ratio of 1.1. This suggests that the stock may be overvalued.

Another concern for Scan Steels is its poor long-term growth, with an annual rate of -22.65% in operating profit over the last 5 years. This could be a red flag for investors looking for sustainable growth.

Technically, the stock is currently in a Mildly Bearish range and has been on a downward trend since July 24, 2024, generating a return of -4.69%. Multiple factors, such as MACD, Bollinger Band, and KST, also indicate a bearish outlook for the stock.

It is worth noting that the majority of shareholders in Scan Steels are non-institutional investors, which could lead to higher volatility in the stock price.

In conclusion, while Scan Steels has shown strong performance in the recent quarter, its overall financials and market performance have led to a 'Hold' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.