Simran Farms Receives 'Hold' Rating, Strong Financials

Simran Farms, a microcap company in the FMCG industry, has recently received a 'Hold' rating from MarketsMOJO on November 7, 2023. This upgrade comes after the company declared very positive results for the quarter ending September 2023, with a growth in net profit of 395%. This marks the fourth consecutive quarter of positive results for the company.
The company's PBT LESS OI(Q) has grown at an impressive rate of 244.3%, while its PAT(Q) has grown at 192.5%. Additionally, its NET SALES(Q) reached a record high of Rs 119.04 crore. These strong financials have contributed to the stock's technical trend, which has improved from mildly bullish to bullish on December 8, 2023.

Simran Farms also boasts a very attractive valuation with a ROCE of 32.7 and an enterprise value to capital employed ratio of 1.6. The stock is currently trading at a discount compared to its historical valuations and has generated a return of 18.22% in the past year, while its profits have risen by 291.2%. The PEG ratio of the company is also at a favorable 0.

However, the majority of shareholders in Simran Farms are non-institutional, which may pose a risk for the stock's performance. Additionally, the company's long-term fundamental strength is weak with a -11.81% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also a concern with a poor EBIT to Interest (avg) ratio of -0.35.

Despite these weaknesses, Simran Farms has shown market-beating performance in the long term and near term, outperforming the BSE 500 index in the last 3 years, 1 year, and 3 months. Investors should carefully consider these factors before making any investment decisions on Simran Farms.