Southern Petrochemical Industries Corporation Upgraded to 'Hold' Rating by MarketsMOJO

Southern Petrochemical Industries Corporation, a smallcap company in the fertilizer industry, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This upgrade is based on several factors that indicate a positive outlook for the company.
One of the main reasons for the 'Hold' rating is the company's strong ability to service its debt. With a low Debt to EBITDA ratio of 1.46 times, Southern Petrochemical Industries Corporation is in a good position to manage its debt obligations.

In addition, the company has shown healthy long-term growth, with an annual growth rate of 46.36% in operating profit. This is a positive sign for investors, indicating that the company has the potential for continued growth in the future.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement since June 27, 2024. Multiple technical indicators, such as RSI, MACD, Bollinger Band, and OBV, are also bullish, further supporting the 'Hold' rating.

Furthermore, with a ROCE of 15.7 and an enterprise value to capital employed ratio of 1.5, the stock is considered to be fairly valued. It is also trading at a discount compared to its historical valuations, making it an attractive option for investors.

However, the company did declare negative results in March 2024, with a fall in operating profit of -46.43%. This trend has continued for the last three consecutive quarters, with a -40.1% decrease in PAT 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.

Despite these negative results, the stock has still outperformed the market in the last year, generating a return of 25.66%. However, this is lower than the market (BSE 500) returns of 38.74%.

In conclusion, while Southern Petrochemical Industries Corporation has shown potential for growth and has a strong ability to manage its debt, the recent negative results and underperformance in the market may warrant a 'Hold' rating for now. Investors should keep an eye on the company's future performance before making any investment decisions.