TIL receives 'Hold' rating from MarketsMOJO after positive results, but high debt raises concerns

TIL, a smallcap engineering company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported very positive results in June 2024, with a growth in net sales of 1835.84%. The company has also declared positive results for the last two consecutive quarters, with a higher PAT (HY) of Rs 33.76 crore and the highest net sales (Q) of Rs 66.98 crore.
Technically, the stock is in a bullish range and the technical trend has improved from mildly bullish on 10-Sep-24. Multiple factors such as RSI, MACD, Bollinger Band, and KST are also bullish for the stock.

However, TIL's high debt (debt-equity ratio at 5.09 times) indicates weak long-term fundamental strength. The company also has a low ability to service debt, with a high debt to EBITDA ratio of 3.65 times. Additionally, the company's return on equity (avg) of 1.39% signifies low profitability per unit of shareholders' funds.

The stock is also considered risky due to its negative EBITDA. It is currently trading at a higher risk compared to its average historical valuations. Although the stock has generated a return of 30.18% in the past year, its profits have only risen by 94%.

Moreover, there has been a decrease in promoter confidence as they have reduced their stake in the company by -8.48% over the previous quarter. Currently, promoters hold 68.43% of the company, which may indicate reduced confidence in the future of the business.

In conclusion, while TIL has shown positive results in the past, its high debt and low profitability may pose a risk for investors. The recent decrease in promoter confidence also raises some concerns. Therefore, MarketsMOJO has upgraded the stock to a 'Hold' rating, suggesting a cautious approach for investors.