Syncom Formulations (India) Downgraded to 'Hold' by MarketsMOJO, Despite Positive Quarter Results

Syncom Formulations (India), a smallcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 21, 2024. This decision was based on the company's low Debt to Equity ratio, which is currently at 0 times.
However, the company has shown positive results in the recent quarter, with a growth in Net Sales of 17.02%. Its operating profit to interest ratio is also at a high of 26.82 times, indicating a strong financial position. In the last 9 months, the company's net sales have grown by 27.37% and its profits have grown by 29.66%.

Technically, the stock is in a mildly bullish range and has shown multiple bullish indicators such as MACD, KST, and DOW. It has also outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of 126.19%.

However, the company's long-term growth has been poor, with a 5-year annual growth rate of only 6.60% for Net Sales and 22.57% for Operating Profit. Its ROE is at 8.8, indicating a very expensive valuation with a price to book value of 6.5.

Despite its recent performance, the stock is currently trading at a discount compared to its historical valuations. In the past year, while the stock has generated a return of 126.19%, its profits have only risen by 32.1%. This gives the company a PEG ratio of 2.1, which may suggest that the stock is overvalued.

It is also worth noting that despite being a smallcap company, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

In conclusion, while Syncom Formulations (India) has shown positive results in the recent quarter and has multiple bullish indicators, its long-term growth has been poor and its valuation is expensive. Investors may want to hold off on buying the stock until further research is conducted.