Suryalakshmi Cotton Mills Upgraded to 'Hold' by MarketsMOJO Amid Bullish Trend and Attractive Valuation

Suryalakshmi Cotton Mills, a microcap company in the textile industry, has recently been upgraded to a 'Hold' by MarketsMOJO on June 25th, 2024. This upgrade comes as the stock has shown a bullish trend and has improved technically from mildly bullish to a bullish range. Multiple factors such as MACD, Bollinger Band, KST, and OBV have contributed to this positive trend.
One of the main reasons for the 'Hold' rating is the company's attractive valuation with a ROCE of 7.6 and a low enterprise value to capital employed ratio of 0.7. Additionally, the stock is currently trading at a discount compared to its historical valuations, making it an attractive option for investors.

However, the company's long-term fundamental strength is weak, with an average ROCE of 5.79% and poor growth in net sales and operating profit over the last 5 years. The company also has a high debt to EBITDA ratio of 6.13 times, indicating a low ability to service debt.

In the latest financial results for March 2024, the company's profits have fallen by -68.3% and the interest expenses have been the highest at Rs 8.39 crore. Additionally, 95.63% of the promoter shares are pledged, which can put downward pressure on the stock prices in falling markets.

Despite underperforming the market in the last year with a return of 22.53%, much lower than the market returns of 39.00%, the stock has shown a positive trend and has the potential for growth. However, it is important to consider the company's weak long-term fundamentals and high promoter pledged shares before making any investment decisions.