Wheels India . Upgraded to 'Hold' by MarketsMOJO After Positive Results and Bullish Indicators

Wheels India ., a smallcap company in the auto ancillary industry, has recently been upgraded to a 'Hold' by MarketsMOJO. This upgrade comes after the company reported positive results in June 2024, with a growth of 82.9% in PBT LESS OI(Q) at Rs 29.49 crore and a ROCE(HY) of 12.20%, the highest in the industry. Additionally, the company's DEBT-EQUITY RATIO(HY) is at its lowest at 0.93 times.
Technically, the stock is in a Mildly Bullish range and has shown improvement since September 19, 2024, generating a return of 9.16%. Multiple factors such as MACD, Bollinger Band, and OBV indicate a bullish trend for the stock.

Attractive valuation is another reason for the 'Hold' call, with a ROCE of 11.1 and an Enterprise value to Capital Employed ratio of 1.7. The stock is currently trading at a discount compared to its historical valuations. In the past year, while the stock has generated a return of 3.58%, its profits have risen by 38.1%, resulting in a PEG ratio of 0.7.

The majority shareholders of Wheels India . are the promoters, indicating their confidence in the company's growth potential. However, the company has weak long-term fundamental strength, with an average ROCE of 8.43%. Its growth has been poor over the last 5 years, with a 7.53% annual growth in Net Sales and 0.92% in Operating profit. The high Debt to EBITDA ratio of 3.70 times also raises concerns about the company's ability to service its debt.

In the last year, Wheels India . has underperformed the market, generating a return of 3.58% compared to the market's (BSE 500) return of 40.49%. While the company's recent positive results and technical indicators suggest a bullish trend, its weak long-term fundamentals and underperformance in the market may warrant a 'Hold' call for now.