COSCO (India) Receives 'Hold' Rating After Strong Quarterly Results and Attractive Valuation

COSCO (India), a microcap company in the leather industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company has shown positive results for the last four consecutive quarters, with a higher PAT (HY) of Rs 2.00 crore and the highest net sales (Q) of Rs 49.19 crore.
The stock is currently in a bullish range and has shown improvement in its technical trend from mildly bullish on 18-Jun-24. Multiple factors, such as MACD, Bollinger Band, KST, and OBV, indicate a bullish outlook for the stock.

Attractive valuation is another reason for the 'Hold' rating, with a ROCE of 9.1 and an enterprise value to capital employed ratio of 1.9. The stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 93.94%, while its profits have increased by 252%. The PEG ratio of the company stands at 0.1.

The majority shareholders of COSCO (India) are the promoters, indicating their confidence in the company's performance. The stock has also outperformed BSE 500 in the last 3 years, 1 year, and 3 months, showcasing its market-beating performance in the long term as well as the near term.

However, the company's long-term fundamental strength is weak, with a -11.00% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 4.71 times, indicating a low ability to service debt. The return on equity (avg) of 7.72% also signifies low profitability per unit of shareholders' funds.

Overall, the 'Hold' rating on COSCO (India) reflects the company's positive performance in recent quarters and its potential for future growth, but also highlights its weak long-term fundamentals and high debt burden. Investors are advised to carefully consider these factors before making any investment decisions.