Empire Industries Receives 'Hold' Rating Despite Attractive Valuation

Empire Industries, a microcap company in the glass industry, has recently received a 'Hold' rating from MarketsMOJO on October 23, 2023. This downgrade is due to the stock being in a Mildly Bullish range and multiple factors such as MACD, Bollinger Band, and KST being bullish.
Despite this, the company has a very attractive valuation with a ROCE of 16 and a 1.8 Enterprise value to Capital Employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, the stock has generated a return of 42.37%, while its profits have risen by 17.6%. The PEG ratio of the company is also at a favorable 0.9.

However, there are some concerns regarding the company's ability to service debt, as it has a high Debt to EBITDA ratio of 3.20 times. This could potentially impact its long-term growth, as evidenced by the slow growth in Net Sales and Operating profit over the last 5 years.

In the latest quarter, the company's results have been flat, with a decrease in NET SALES(Q) at Rs 153.53 cr by -16.61% and an increase in INTEREST(Q) at Rs 7.54 cr by 35.61%.

Furthermore, there has been a decrease in institutional investors' participation in the company, with a -1.03% decrease in their stake over the previous quarter. These investors have better resources and capabilities to analyze a company's fundamentals, making this decrease a cause for concern.

Overall, while Empire Industries has shown market-beating performance in the past year, there are some red flags that investors should consider before making any investment decisions. It is important to carefully analyze the company's financials and future prospects before making any investment in this microcap company in the glass industry.