Star Delta Transformers Receives 'Hold' Rating from MarketsMOJO, Caution for Investors

Star Delta Transformers, a microcap company in the electric equipment industry, has recently received a 'Hold' rating from MarketsMOJO on May 6, 2024. This downgrade is due to the company's low Debt to Equity ratio, which is currently at 0 times.
However, the company has shown positive results in the past, with a growth in Operating Profit of 75.76% and positive results for the last 5 consecutive quarters. In addition, the company's PBT LESS OI(Q) has grown at 146.96%, with a highest ROCE(HY) of 22.42% and a growth in NET SALES(Q) at Rs 35.16 cr at 61.58%.

Technically, the stock is in a Mildly Bullish range, with both MACD and KST technical factors being Bullish. The majority shareholders of the company are the Promoters, who have consistently generated returns over the last 3 years. In fact, in the last 1 year alone, the stock has outperformed BSE 500 and generated 453.76% returns.

However, the company's management efficiency is a cause for concern, with a low ROE of 7.88%. This signifies low profitability per unit of shareholders' funds. In addition, the company's long term growth has been poor, with Net Sales growing at an annual rate of 7.52% and Operating Profit at 18.14% over the last 5 years.

The stock is currently trading at an expensive valuation, with a Price to Book Value of 4.4 and a ROE of 18.1. This is a premium compared to its average historical valuations. While the stock has generated high returns in the past year, its profits have only risen by 182.2%, resulting in a PEG ratio of 0.1.

Overall, while Star Delta Transformers has shown positive results in the past, the recent downgrade to 'Hold' suggests caution for potential investors due to the company's low management efficiency and expensive valuation.