Eco Recycling's Stock Upgrade to 'Buy' Attracts Investor Attention with Impressive Results

Eco Recycling, a smallcap company in the trading industry, has recently caught the attention of investors as MarketsMOJO has upgraded its stock call to 'Buy' on October 3, 2024.
The company has been making waves in the market with its outstanding results in the June 2024 quarter, showing a growth in net profit of 393.94%. This positive trend has continued for the last 5 consecutive quarters, with the company's ROCE (HY) reaching a high of 31.85% and net sales (Q) at Rs 11.40 crore. PBDIT (Q) has also reached a high of Rs 8.19 crore.

Technically, the stock is in a bullish range and has shown improvement from mildly bullish on October 3, 2024. Multiple factors such as MACD, Bollinger Band, KST, and DOW are all pointing towards a bullish trend for the stock.

Eco Recycling has also shown consistent returns over the last 3 years, outperforming BSE 500 in each of the last 3 annual periods and generating a return of 365.43% in the last 1 year.

However, there are some risks associated with investing in this company. The high debt to EBITDA ratio of 4.83 times may affect the company's ability to service its debt. Additionally, the low return on capital employed (avg) of 3.61% indicates low profitability per unit of total capital.

Furthermore, the company's net sales have only grown at an annual rate of 19.04% over the last 5 years, indicating poor long-term growth potential. With a ROE of 26.9, the stock is also trading at a premium compared to its average historical valuations, with a price to book value of 28.3.

It is also worth noting that despite its smallcap size, domestic mutual funds hold only 0% of the company, which may suggest that they are not comfortable with the stock's current price or the business itself.

In conclusion, while Eco Recycling has shown impressive results and a bullish trend, investors should carefully consider the risks associated with the company before making any investment decisions.