Udayshivakumar Infra Downgraded to 'Sell' by MarketsMOJO After Negative Q2 Results

Udayshivakumar Infra, a microcap company in the capital goods industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 3, 2024. This decision was based on the company's negative results in the June quarter, after three consecutive positive quarters. The profit after tax has fallen by 75.6% to Rs 1.83 crore, while the operating profit to interest ratio is at its lowest at 3.34 times. Additionally, the net sales have also decreased to Rs 55.42 crore, the lowest in the quarter.
Technically, the stock is currently in a mildly bearish range and the trend has deteriorated from sideways to bearish since September 3, 2024, with a return of 1.71%. One of the key technical factors, the Bollinger Band, has also been bearish since the same date.

However, there are some positive factors to consider. The company has shown high management efficiency with a return on capital employed (ROCE) of 19.83%. It also has a low debt to equity ratio of 0.10 times, indicating a strong financial position. The company has also shown healthy long-term growth with an annual growth rate of 40.00% in net sales.

In terms of valuation, the company has a very attractive ROCE of 16.9 and an enterprise value to capital employed ratio of 1.7. The stock is currently trading at a discount compared to its average historical valuations. Over the past year, while the stock has generated a return of 87.23%, its profits have also increased by 88%.

The majority shareholders of Udayshivakumar Infra are the promoters, indicating their confidence in the company. The stock has also outperformed the market (BSE 500) with a return of 87.23% in the last year, compared to the market's return of 38.66%.

In conclusion, while Udayshivakumar Infra has shown some negative results in the recent quarter, it also has some positive factors to consider. Investors should carefully evaluate the company's financials and performance before making any investment decisions.