Swaraj Engines downgraded to 'Hold' by MarketsMOJO, potential for short-term gains

Swaraj Engines, a smallcap company in the diesel engines industry, has recently been downgraded to a 'Hold' by MarketsMOJO on October 28, 2024. This decision was based on various factors, including the company's high management efficiency with a ROE of 34.52% and a low Debt to Equity ratio of 0 times.
In addition, the company has shown positive results in September 2024, with its highest operating cash flow of Rs 142.38 crore and highest dividend per share of Rs 95.00. Its net sales for the quarter also reached a high of Rs 464.24 crore.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, KST, DOW, and OBV indicating a bullish trend. Its ROE of 43.3 also suggests a fair valuation with a price to book value of 10.3.

However, it is worth noting that the stock is currently trading at a fair value compared to its historical valuations. While it has generated a return of 46.19% in the past year, its profits have only increased by 8.1%, resulting in a PEG ratio of 2.9.

The majority shareholders of Swaraj Engines are the promoters, and the company has shown market-beating performance in the long term as well as the near term. It has outperformed BSE 500 in the last 3 years, 1 year, and 3 months, generating a return of 46.19% in the past year.

However, the company's long-term growth has been poor, with net sales growing at an annual rate of 13.08% and operating profit at 9.89% over the last 5 years. This may be a cause for concern for investors considering a long-term investment in Swaraj Engines. Overall, while the stock may have potential for short-term gains, it is currently recommended to hold off on investing in it for the long term.