Sequent Scientific Upgraded to 'Hold' by MarketsMOJO, Strong Short-Term Performance but Long-Term Concerns Remain

Sequent Scientific, a smallcap pharmaceutical company, has recently received an upgraded stock call from MarketsMOJO. The stock has been upgraded to 'Hold' on November 4, 2024.
The decision to upgrade the stock to 'Hold' is based on positive results in June 2024, with PBT LESS OI(Q) growing at 128.28% and PBDIT(Q) reaching its highest at Rs 41.95 crore. Additionally, the operating profit to net sales(Q) has also reached its highest at 10.75%. These factors indicate a strong performance by the company.

Technically, the stock is currently in a bullish range and has shown improvement since November 1, 2024, generating a return of 4.98%. Multiple factors such as MACD, Bollinger Band, and KST also suggest a bullish trend for the stock.

Institutional investors have also shown an increasing interest in the company, with their stake increasing by 2.68% in the previous quarter. This indicates that these investors have better resources and capabilities to analyze the fundamentals of the company, making their participation a positive sign for retail investors.

Sequent Scientific has also outperformed the market (BSE 500) with a return of 100.68% in the last year, compared to the market's return of 31.79%.

However, the company's long-term fundamental strength is weak, with a -200.35% CAGR growth in operating profits over the last 5 years. The return on equity (avg) is also low at 7.53%, indicating low profitability per unit of shareholders' funds.

The stock is currently trading at an expensive valuation with a 5.1 enterprise value to capital employed. However, it is still at a discount compared to its average historical valuations. Despite the stock's impressive return of 100.68% in the last year, its profits have only risen by 94.5%.

Overall, while Sequent Scientific has shown strong performance in the short term, its long-term fundamentals and valuation may be a cause for concern. Investors are advised to hold the stock and monitor its performance closely.