Texmaco Rail & Engineering's Strong Financial Results Lead to 'Buy' Rating Upgrade

Texmaco Rail & Engineering, a midcap company in the railway industry, has recently caught the attention of investors with its outstanding financial results for the quarter ending September 2024. With a growth in net profit of 233.81%, the company has declared positive results for the last 8 consecutive quarters. This has led MarketsMOJO to upgrade their stock call on Texmaco Rail & Engineering to 'Buy' on October 28, 2024.
One of the key factors contributing to this upgrade is the company's strong operating cash flow of Rs 95.78 crore, which is the highest in its industry. Additionally, Texmaco Rail & Engineering has also shown a high return on capital employed (ROCE) of 11.82%, indicating efficient use of its capital. Its debtors turnover ratio is also the highest in the industry at 4.43 times, further highlighting its strong financial performance.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown a positive trend since October 24, 2024, with a return of 2.26%. The MACD and KST technical factors are also bullish, indicating a positive outlook for the stock.

In terms of valuation, Texmaco Rail & Engineering is trading at an attractive price to book value of 3.1, which is a discount compared to its historical average. Over the past year, the stock has generated a return of 66.79%, while its profits have risen by 204.2%. This has resulted in a low PEG ratio of 0.3, indicating that the stock is undervalued.

Moreover, the company has consistently delivered strong returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. This further solidifies its position as a strong player in the railway industry.

However, there are some risks to consider when investing in Texmaco Rail & Engineering. The company has a high debt to EBITDA ratio of 4.31 times, which may affect its ability to service its debt. Additionally, its return on equity (ROE) is relatively low at 3.91%, indicating lower profitability per unit of shareholders' funds.

Furthermore, there has been a decrease in participation by institutional investors, who collectively hold 18.04% of the company. This may be a cause for concern as institutional investors have better resources and capabilities to analyze company fundamentals.

In conclusion, Texmaco Rail & Engineering is a strong midcap company in the railway industry with outstanding financial performance and a positive outlook. However, investors should carefully consider the risks involved before making any investment decisions.