Syncom Formulations (India) Downgraded to 'Hold' by MarketsMOJO, Despite Positive Short-Term Results

Syncom Formulations (India), a smallcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 7, 2024. This decision was based on the company's low Debt to Equity ratio of 0.03 times, indicating a stable financial position.
In the latest quarter, the company reported a growth in Net Sales of 17.02%, leading to very positive results. Its operating profit to interest ratio was also the highest at 26.82 times, with net sales reaching Rs 87.26 crore and PBT less OI at Rs 8.76 crore.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. In the long term, the stock has outperformed the BSE 500 index, generating a return of 107.53% in the last year.

However, the company's long-term growth has been poor, with net sales growing at an annual rate of 6.60% and operating profit at 13.67% over the last 5 years. Additionally, with a ROE of 8.8, the stock is currently trading at a very expensive valuation with a price to book value of 6.4.

Despite its recent success, the stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 107.53%, its profits have only risen by 32.1%, resulting in a PEG ratio of 2.

It is also worth noting that despite its smallcap size, domestic mutual funds hold only 0% of the company. This could signify that they are either not comfortable with the current price or have not conducted in-depth research on the company.

In conclusion, while Syncom Formulations (India) has shown promising results in the short term, its long-term growth and expensive valuation may warrant a 'Hold' rating for now. Investors should keep an eye on the company's performance and conduct their own research before making any investment decisions.