Scan Steels: Impressive Growth and Attractive Valuation Make it a 'Buy' Stock

Scan Steels, a microcap company in the iron and steel industry, has recently caught the attention of investors and analysts. MarketsMOJO has upgraded their stock call on Scan Steels to 'Buy' on August 2nd, 2024.
One of the main reasons for this upgrade is the company's impressive growth in net profit, which saw a 79.65% increase in the last quarter of June 2024. This positive trend has continued for the past two consecutive quarters, with the company's PBDIT(Q) reaching a high of Rs 24.05 crore and operating profit to net sales(Q) at 10.30%. Additionally, PBT LESS OI(Q) has also reached a high of Rs 17.84 crore.

Technically, the stock is currently in a mildly bullish range and has shown improvement from a mildly bearish trend on August 2nd, 2024. This can be attributed to multiple bullish factors such as MACD, Bollinger Band, KST, and OBV.

Moreover, Scan Steels has an attractive valuation with a ROCE of 6.9 and an enterprise value to capital employed ratio of 1. This is further supported by the fact that the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 87.81%, while its profits have seen a staggering increase of 2811%.

It is worth noting that the majority of shareholders in Scan Steels are non-institutional, indicating a strong belief in the company's potential. The stock has also outperformed the market (BSE 500) with a return of 87.81% compared to the market's 37.36% in the last year.

However, there are some risks to consider, such as the company's poor long-term growth as its operating profit has seen a decline of -22.65% over the last 5 years. Despite this, Scan Steels has shown promising growth in recent quarters and has the potential to continue its positive trend in the future. With its attractive valuation and market-beating performance, Scan Steels is definitely a stock to keep an eye on.