Southern Petrochemical Industries Corporation Upgraded to 'Hold' by MarketsMOJO Amid Strong Debt Servicing Ability and Long-Term Growth Potential

Southern Petrochemical Industries Corporation, a smallcap company in the fertilizer industry, has recently been upgraded to a 'Hold' by MarketsMOJO on July 24, 2024. This upgrade comes as a result of the company's strong ability to service its debt, with a low Debt to EBITDA ratio of 1.46 times. Additionally, the company has shown healthy long-term growth, with an annual growth rate of 46.36% in operating profit.
From a technical standpoint, the stock is currently in a bullish range, with multiple factors such as RSI, MACD, Bollinger Band, and KST all indicating a positive trend. Furthermore, with a ROCE of 15.7, the stock is considered to have a fair valuation, with an Enterprise value to Capital Employed ratio of 1.5.

Despite these positive factors, the company has declared negative results for the last three consecutive quarters, with a fall in operating profit of -46.43% in March 2024. This has resulted in a decline in profits by -40.1% and the lowest operating profit to interest ratio of 1.30 times. Additionally, the net sales for the quarter were also at their lowest at Rs 124.88 crore.

Overall, while Southern Petrochemical Industries Corporation shows potential for long-term growth and has a strong ability to service its debt, the recent negative results may warrant a 'Hold' recommendation for now. Investors should keep an eye on the company's performance in the coming quarters to make an informed decision.