Smallcap company GRP receives 'Buy' rating and shows strong financial growth

GRP, a smallcap company in the rubber products industry, has recently received a 'Buy' rating from MarketsMOJO on July 18, 2024. This upgrade comes after the company declared very positive results in March 2024, with a growth in net profit of 170.77%. The company's PAT(Q) at Rs 13.50 crore has also seen a significant growth of 293.4%, while its ROCE(HY) is at its highest at 14.24%. Additionally, the operating profit to interest(Q) ratio is also at its highest at 13.44 times.

Technically, the stock is in a bullish range and has shown a significant improvement since April 15, 2024, generating a return of 118.61%. Multiple factors such as MACD, Bollinger Band, KST, DOW, and OBV are all indicating a bullish trend for the stock.

Moreover, GRP has consistently outperformed BSE 500 in the last 3 annual periods, with a return of 276.81% in the last 1 year. However, there are some risks associated with the stock, such as a high debt to EBITDA ratio of 3.21 times, indicating a low ability to service debt. The company's net sales have also shown a slow growth rate of 5.24% over the last 5 years, which could affect its long-term growth potential.

In terms of valuation, GRP has a high ROCE of 13.8, making it a very expensive stock with an enterprise value to capital employed ratio of 7.3. However, the stock is currently trading at a discount compared to its average historical valuations. The PEG ratio of the company is also at 1, indicating a fair valuation.

It is worth noting that despite its small size, domestic mutual funds hold only 0.01% of the company, which could suggest that they are not comfortable with the stock's current price or its business. However, domestic mutual funds have the capability to conduct in-depth research on companies, which could also mean that they may increase their stake in the future.

In conclusion, GRP's recent 'Buy' rating and positive financial results make it an attractive stock for investors. However, it is important to consider the risks associated with the stock, such as its high debt and slow long-term growth. With a bullish trend and consistent returns, GRP could be a promising addition to one's portfolio.