Sundaram Multi Pap Receives 'Hold' Rating After Strong Q1 Results

Sundaram Multi Pap, a microcap company in the printing and stationery industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company's positive results in the quarter ending June 2024, with its net sales reaching a record high of Rs 42.42 crore and PBDIT at Rs 3.71 crore. The operating profit to net sales ratio also saw a significant increase, reaching 8.75%.
Technically, the stock is currently in a mildly bullish range and the trend has improved from sideways to bullish. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock.

In terms of valuation, Sundaram Multi Pap is currently trading at a discount compared to its average historical valuations. Its ROCE of -0.8 and enterprise value to capital employed ratio of 1.4 make it an attractive option for investors.

However, the company's long-term fundamental strength is weak with a -11.78% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also poor, with a low EBIT to interest ratio of 0.76. Additionally, the company has only been able to generate a low return on equity of 3.03%, indicating low profitability per unit of shareholders' funds.

In terms of performance, Sundaram Multi Pap has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of -7.12%. This, coupled with its weak long-term and near-term performance, makes it a 'Hold' for now. Majority of the company's shareholders are non-institutional investors.