VMS Industries Downgraded to 'Hold' by MarketsMOJO, Despite Recent Positive Results

VMS Industries, a microcap company in the miscellaneous industry, has recently been downgraded to a 'Hold' by MarketsMOJO on April 30, 2024. This decision was based on various factors, including the company's recent financial performance and technical indicators.
While VMS Industries reported outstanding results in December 2023 with a growth in net profit of 1820%, the company's long-term fundamental strength is weak with a -181.97% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is poor with a low EBIT to Interest ratio of -0.16.

However, the company has shown positive results for the last 2 consecutive quarters, with a PAT of Rs 4.93 crore and a growth of 473.26%. The company's ROCE (HY) is also at its highest at 7.92%, and its net sales for the last 9 months are higher at Rs 174.74 crore.

Technically, the stock is in a mildly bullish range with multiple factors such as MACD, Bollinger Band, KST, and OBV indicating a bullish trend. The stock also has a very attractive valuation with a 1.8 price to book value and is currently trading at a discount compared to its average historical valuations.

Despite the company's strong market-beating performance with a return of 246.47% in the last year, its profits have only risen by 586%, resulting in a PEG ratio of 0. This suggests that the stock may be overvalued.

Investors should also take note that 53% of promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets. Overall, while VMS Industries has shown promising results in the short term, its weak long-term fundamental strength and high promoter pledged shares make it a 'Hold' for now.