Shah Metacorp Receives 'Hold' Rating After Positive Q1 Results, Technical Indicators Show Bullish Trend

Shah Metacorp, a microcap company in the iron and steel industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results for the quarter ending in March 2024, with a growth in net sales of 258.48%. This marks the sixth consecutive quarter of positive results for the company.
The company's PBDIT(Q) and PBT LESS OI(Q) have also reached their highest levels at Rs 2.18 crore and Rs 1.39 crore respectively. Additionally, the net sales for the quarter have also reached a high of Rs 46.28 crore. These positive financial indicators have contributed to the stock's technical trend, which has improved from mildly bullish to bullish on July 4, 2024.

Furthermore, multiple technical factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock. However, it is worth noting that the majority of shareholders for Shah Metacorp are non-institutional investors.

Despite the recent positive results, the company's long-term fundamental strength is weak with a -205.32% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 6.85 times, indicating a low ability to service debt. The return on equity (avg) for the company is also low at 0.27%, indicating low profitability per unit of shareholders' funds.

The stock is also considered risky due to its negative operating profits and trading at a higher valuation compared to its historical average. While the stock has generated a return of 18.82% in the last year, it has underperformed the market (BSE 500) returns of 37.74%. Investors should carefully consider these factors before making any investment decisions regarding Shah Metacorp.