Southern Infosys Upgraded to 'Hold' by MarketsMOJO After Positive First Half Results

Southern Infosys, a microcap IT software company, has recently caught the attention of investors as its stock call has been upgraded to 'Hold' by MarketsMOJO on August 19, 2024. This upgrade comes after the company reported positive results in the first half of 2024, with a 31.06% growth in net sales and a higher PAT of Rs 0.24 crore. The company's ROCE also reached its highest at 5.27%.
Technically, the stock is currently in a bullish range and the technical trend has improved from mildly bullish on August 19, 2024. Multiple factors such as MACD, Bollinger Band, and KST are also indicating a bullish trend for the stock.

Majority shareholders of Southern Infosys are the promoters, which is a positive sign for investors. The stock has also outperformed the market (BSE 500) with a return of 74.56% in the last year, compared to the market's return of 37.46%.

However, the company's long-term fundamental strength is weak with a -4.17% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also poor with a negative EBIT to Interest ratio. The company has also reported losses, resulting in a negative ROCE.

With an ROE of 4.7, the stock is currently trading at an expensive valuation with a price to book value of 2.3. However, it is still trading at a discount compared to its average historical valuations. Despite the stock's impressive return in the past year, its profits have only risen by 20%, resulting in a low PEG ratio of 0.1.

Overall, Southern Infosys shows potential for growth with its recent positive results and bullish technical trend. However, investors should also consider the company's weak long-term fundamentals and expensive valuation before making any investment decisions.