Solid Stone Company Receives 'Hold' Rating from MarketsMOJO, Technical Factors Show Bullish Trend

Solid Stone Company, a microcap company in the ceramics and allied industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the company's technical trend has improved from Mildly Bullish to Bullish on 06-May-24. Additionally, the stocks MACD and KST technical factors are also showing a Bullish trend.
One of the reasons for this upgrade is the company's attractive valuation with a ROCE of 8.9 and a 1 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 21.14%, while its profits have increased by 47%. This has resulted in a low PEG ratio of 0.2 for the company.

However, there are some concerns regarding the company's long-term fundamental strength. Over the last 5 years, the company has seen a -7.09% CAGR growth in Net Sales, indicating weak performance. Additionally, the company has a high Debt to EBITDA ratio of 6.74 times, which may affect its ability to service debt. The company's Return on Equity (avg) is also low at 1.86%, indicating low profitability per unit of shareholders' funds.

In terms of recent financial results, the company's Dec 23 results were flat with a -30.95% growth in NET SALES(HY) at Rs 10.71 cr and the lowest CASH AND CASH EQUIVALENTS(HY) at Rs 0.03 cr. The PBDIT(Q) was also at its lowest at Rs 0.89 cr.

Another concerning factor is the decreasing stake of promoters in the company. In the previous quarter, promoters decreased their stake by -0.75% and currently hold 69.34% of the company. This may indicate reduced confidence in the future of the business.

Overall, Solid Stone Company has underperformed the market in the last 1 year with a return of 21.14%, much lower than the market (BSE 500) returns of 34.08%. While the recent technical trend and attractive valuation may make it a 'Hold' for now, investors should keep an eye on the company's long-term fundamental strength and promoter confidence.