Candour Techtex Receives 'Hold' Rating from MarketsMOJO, Strong Fundamentals and Low Debt Drive Upgrade

Candour Techtex, a microcap company in the textile machinery industry, has recently received a 'Hold' rating from MarketsMOJO on November 18, 2024. This upgrade is based on the company's strong long-term fundamental strength and low debt.
The stock has been performing well in the market, with a technical trend that has improved from Mildly Bullish on August 16, 2024, and has generated a return of 77.68% since then. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock.

Majority shareholders of Candour Techtex are non-institutional investors, and the company has been outperforming the BSE 500 index in the long term as well as the near term. In the last year, the stock has generated a return of 125.94%, while also outperforming the index in the last 3 years, 1 year, and 3 months.

However, the company's ability to service its debt is weak, with a poor EBIT to Interest (avg) ratio of -0.18. This signifies a low profitability per unit of shareholders' funds. In the latest quarter, the company's operating cash flow was at its lowest at Rs -3.39 crore, and its cash and cash equivalents were also at their lowest at Rs 1.81 crore. The net sales for the quarter were also at their lowest at Rs 39.76 crore.

With a ROCE of 2.2, the company's valuation is considered expensive, with an enterprise value to capital employed ratio of 2.9. However, the stock is currently trading at a discount compared to its average historical valuations.

In the past year, while the stock has generated a significant return of 125.94%, its profits have fallen by -70.9%. This could be a cause for concern for investors, but the company's strong long-term fundamentals and low debt make it a 'Hold' for now. Investors should keep an eye on the company's performance in the upcoming quarters to make an informed decision.