Strides Pharma Science Downgraded to 'Hold' by MarketsMOJO Due to Mixed Performance

Strides Pharma Science, a midcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 9, 2024. This decision was based on the company's recent financial performance and technical trends.
In the last quarter, Strides Pharma Science reported a growth in net profit of 239.88%, showcasing outstanding results. This positive trend has been consistent for the past four quarters, with the company's ROCE (HY) at a high of 7.16% and inventory turnover ratio (HY) at 3.60 times. Additionally, the company's net sales for the quarter were at a record high of Rs 1,087.51 crore.

From a technical standpoint, the stock is currently in a bullish range and has shown a significant improvement since July 24, 2024, generating a return of 51.28%. Multiple factors such as MACD, Bollinger Band, KST, DOW, and OBV indicate a bullish trend for the stock.

Attractive valuations and market-beating performance are also some positive aspects of Strides Pharma Science. With a ROCE of 12 and an enterprise value to capital employed ratio of 3.7, the stock is currently trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 201.15%, outperforming the BSE 500 index.

However, the company's long-term fundamental strength is weak, with a CAGR growth in operating profits of only 4.70% over the last five years. Additionally, the high debt to EBITDA ratio of 4.29 times indicates a low ability to service debt. The company's return on equity (avg) of 3.12% also signifies low profitability per unit of shareholders' funds.

Another concerning factor is that 64.65% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. This proportion of pledged holdings has also increased by 51.62% over the last quarter.

In conclusion, while Strides Pharma Science has shown strong financial performance and technical trends, the company's weak long-term fundamentals and high promoter pledged shares make it a 'Hold' for now. Investors should closely monitor the company's performance and keep an eye on any changes in the pledged holdings.