AVG Logistics Receives 'Hold' Rating from MarketsMOJO, Attractive Valuation but High Debt Raises Concerns

AVG Logistics, a microcap logistics company, has recently received a 'Hold' rating from MarketsMOJO on July 29, 2024. The stock is currently in a Mildly Bullish range and has shown a technical improvement from Sideways on July 24, 2024, with a return of 2.18% since then.

One of the reasons for the 'Hold' rating is the company's attractive valuation with a ROCE of 11 and an Enterprise value to Capital Employed ratio of 2.2. However, the stock is currently trading at a premium compared to its average historical valuations. Despite generating a return of 85.09% in the past year, the company's profits have only increased by 178%, resulting in a low PEG ratio of 0.2.

Institutional investors have also shown an increasing interest in the company, with a 0.58% increase in their stake over the previous quarter. This is a positive sign as these investors have better resources to analyze the fundamentals of companies.

AVG Logistics has outperformed the market (BSE 500) with a return of 85.09% in the last year, compared to the market's return of 37.44%.

However, the company's high Debt to EBITDA ratio of 3.45 times raises concerns about its ability to service debt. This could potentially impact the company's long-term growth. Over the last 5 years, the company has shown a slow growth rate, with Net Sales growing at an annual rate of 8.90% and Operating profit at 16.34%.

In the latest quarter, the company has declared negative results after two consecutive positive quarters. The PBT LESS OI(Q) has fallen by -84.92% at Rs 4.44 crore, and the PAT(Q) has fallen by -58.2% at Rs 11.68 crore. The OPERATING PROFIT TO NET SALES (Q) is also at its lowest at 15.52%.

Overall, while AVG Logistics has shown a strong performance in the past year, its high debt and slow long-term growth rate raise concerns. Investors are advised to hold onto their stocks and monitor the company's performance closely.