Zee Learn Receives 'Hold' Rating from MarketsMOJO After Positive Q1 Results

Zee Learn, a microcap company in the educational institutions industry, has recently received a 'Hold' rating from MarketsMOJO on June 19, 2024. This upgrade comes after the company declared very positive results for the quarter ending in March 2024, with a growth in net sales of 4.9%. This is the second consecutive quarter of positive results for Zee Learn.
The company's ROCE (HY) is at a high of 17.39%, and its operating profit to interest (Q) is also at a high of 5.14 times. Additionally, its net sales (Q) are at a record high of Rs 116.47 crore. These factors contribute to the stock being in a mildly bullish range, with technical trends showing improvement from sideways on June 19, 2024.

Multiple technical indicators, such as MACD, Bollinger Band, and KST, also suggest a bullish outlook for the stock. However, with a ROCE of 13.9, the stock is currently fairly valued with an enterprise value to capital employed ratio of 1.1. It is also trading at a premium compared to its historical valuations.

Despite generating a return of 138.92% in the last year, which is significantly higher than the market (BSE 500) returns of 36.98%, Zee Learn's long-term fundamental strength is weak. It has a negative CAGR growth in operating profits of -159.51% over the last 5 years, and a high debt to EBITDA ratio of 5.52 times, indicating a low ability to service debt. The company's return on equity (avg) is also at a low of 8.25%, indicating low profitability per unit of shareholders' funds.

Furthermore, 29.16% of the promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets. While Zee Learn has shown strong market-beating performance in the short term, its long-term fundamentals raise some concerns. Investors may want to hold onto their positions for now and closely monitor the company's future performance.