Solitaire Machine Tools Receives 'Hold' Rating from MarketsMOJO After Strong Q3 Results

Solitaire Machine Tools, a microcap engineering company, has recently received a 'Hold' rating from MarketsMOJO on August 6, 2024. This upgrade comes after the company reported positive results in the third quarter of the fiscal year 2024, with higher net sales of Rs 18.92 crore and a PBDIT of Rs 0.87 crore, the highest in the quarter. The company's PBT less OI also saw a significant increase at Rs 0.78 crore.
Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on August 6, 2024. Multiple factors such as MACD, Bollinger Band, KST, and DOW are also indicating a bullish trend for the stock.

Solitaire Machine Tools has a majority of non-institutional shareholders and has consistently outperformed BSE 500 in the last three annual periods. In the last one year, the stock has generated a return of 36.91%, showcasing its strong performance.

However, the company's long-term fundamental strength is weak with a CAGR growth of only 2.37% in operating profits over the last five years. Its ability to service debt is also poor with a low EBIT to Interest ratio of 1.62. The company's return on equity is at 8.00%, indicating low profitability per unit of shareholders' funds.

With a ROE of 10, the stock is currently trading at an expensive valuation with a price to book value of 2.5. However, it is still trading at a fair value compared to its average historical valuations. In the past year, while the stock has generated a return of 36.91%, its profits have only risen by 13.8%, resulting in a PEG ratio of 2.2.

Overall, Solitaire Machine Tools has shown promising performance in the short term, but its long-term fundamentals and valuation may be a cause for concern. Investors are advised to hold onto their positions for now and keep an eye on the company's future performance.