UFO Moviez India Receives 'Hold' Rating

UFO Moviez India, a microcap company in the lifestyle industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results for the quarter ending September 23, with a growth in operating profit of 443.4%. This marks the eighth consecutive quarter of positive results for the company.
The company's ROCE (HY) is at its highest at 5.76%, while its operating profit to interest (Q) is also at its highest at 5.28 times. Additionally, the PBDIT (Q) is at its highest at Rs 17.11 crore. These factors, along with a bullish technical trend, have contributed to the 'Hold' rating.

However, the company's long-term fundamental strength is weak with a -172.07% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also poor with a negative EBIT to interest (avg) ratio of -1.91. The return on equity (avg) is at 4.76%, indicating low profitability per unit of shareholders' funds.

Furthermore, the stock is currently trading at a premium compared to its historical valuations, with a price to book value of 1.6 and a ROE of 1.9. While the stock has generated a return of 25.28% in the past year, its profits have only risen by 111.9%, resulting in a PEG ratio of 0.8.

It is also worth noting that 26.15% of the promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets. Overall, while the company has shown positive results in the recent quarter, its long-term fundamentals and valuation may warrant caution for potential investors.