Shree Rama Multi-Tech Receives 'Hold' Rating After Strong Quarter Results

Shree Rama Multi-Tech, a microcap company in the packaging industry, has recently received a 'Hold' rating from MarketsMOJO on August 13, 2024. This upgrade comes after the company reported positive results in the quarter ending June 2024, with a PBDIT (profit before depreciation, interest, and taxes) of Rs 5.15 crore, the highest in the quarter. The operating profit to net sales ratio also reached its highest at 11.98%, while PBT (profit before tax) less OI (other income) was at Rs 3.69 crore, the highest in the quarter.

Technically, the stock is currently in a mildly bullish range, with the trend improving from mildly bearish on August 12, 2024. Since then, the stock has generated a return of 1.98%. Multiple factors, such as MACD, Bollinger Band, KST, and OBV, are bullish for the stock.

With a ROCE (return on capital employed) of 9.3%, the stock is fairly valued with an enterprise value to capital employed ratio of 3.3. It is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 56.54%, while its profits have increased by 113.6%. The PEG (price/earnings to growth) ratio of the company is 0.3.

The majority shareholders of Shree Rama Multi-Tech are the promoters, indicating their confidence in the company. The stock has consistently outperformed BSE 500 in the last three annual periods, along with generating a return of 56.54% in the past year.

However, the company has a high debt to equity ratio (average) of 10.16 times, which may be a cause for concern. The net sales have also shown a poor long-term growth rate of 6.66% over the last five years. Additionally, the return on capital employed (average) is at a low of 2.65%, indicating low profitability per unit of total capital (equity and debt).

In conclusion, while Shree Rama Multi-Tech has shown positive results in the recent quarter and has a bullish technical trend, investors should also consider the high debt and low long-term growth rate of the company before making any investment decisions.