Ultracab (India) Downgraded to 'Hold' by MarketsMOJO, Concerns Over Debt and Underperformance

Ultracab (India) is a microcap company in the cable industry. Recently, MarketsMOJO downgraded its stock call to 'Hold' on October 28, 2024. This decision was based on the company's financial performance in the last quarter, where it reported a growth in net profit of 106.8%. However, the technical trend for the stock is currently sideways, indicating no clear price momentum.
Despite the positive results in the last two consecutive quarters, Ultracab (India) has a low ability to service debt with a high debt to EBITDA ratio of 4.05 times. This may be a concern for investors as it could affect the company's long-term growth potential. In fact, over the last five years, the company has only seen a modest growth rate of 14.76% in net sales.

In terms of valuation, Ultracab (India) is currently trading at a discount compared to its historical average. Its ROCE of 14.2 also indicates a very attractive valuation with a 2.3 enterprise value to capital employed. However, the stock has underperformed the market in the last year, generating negative returns of -13.81% while the market (BSE 500) has seen a return of 34.46%.

It is worth noting that the majority of the company's shareholders are non-institutional, which may indicate a lack of confidence from larger investors. Overall, while Ultracab (India) has shown positive financial results in the last quarter, its high debt and underperformance in the market may be a cause for concern for potential investors.