Subros downgraded to 'Hold' by MarketsMOJO, despite strong short-term performance

Subros, a midcap auto ancillary company, has recently been downgraded to a 'Hold' by MarketsMOJO on September 30, 2024. This decision was based on the company's low Debt to Equity ratio of 0.04 times, indicating a stable financial position.
However, Subros has shown positive results in the last four consecutive quarters, with a growth in net profit of 159.36% in June 2024. The company's ROCE (HY) is also at a high of 15.85%, and its cash and cash equivalents (HY) are at a record high of Rs 122.35 crore.

Technically, the stock is in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend. Additionally, institutional holdings in the company are at a high of 43.61%, indicating their confidence in the company's fundamentals.

Subros has also outperformed the BSE 500 index in the long term, generating a return of 97.10% in the last year. However, its operating profit has shown poor growth over the last five years, with an annual rate of -21.32%.

The company's ROE is at 10.2, indicating a very expensive valuation with a price to book value of 5.2. The stock is currently trading at a premium compared to its historical valuations. While the stock has generated a high return of 97.10% in the last year, its profits have only risen by 138.9%, resulting in a PEG ratio of 0.3.

Overall, Subros has shown positive results in the short term, but its long term growth has been poor. Investors should carefully consider the company's valuation before making any investment decisions.