Garment Mantra Lifestyle Receives 'Hold' Rating from MarketsMOJO After Positive Results and Mildly Bullish Trend

Garment Mantra Lifestyle, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results in December 2023, with a growth in net profit of 605%. The company has also shown positive results for the last two consecutive quarters, with a PAT(Q) of Rs 1.30 crore, growing at 584.2%, and a PBDIT(Q) of Rs 2.71 crore, the highest in its history. Additionally, the operating profit to net sales(Q) ratio is also at its highest at 8.12%.
Technically, the stock is in a mildly bullish range and the trend has improved from sideways on 29th April 2024. Multiple factors such as MACD, Bollinger Band, and KST also indicate a mildly bullish trend for the stock.

With a ROCE of 7.3, the stock is fairly valued with an enterprise value to capital employed ratio of 1.3. It is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 36.38%, while its profits have risen by 180%. The PEG ratio of the company is also at a low 0.2.

However, the company does have some weak long-term fundamental strengths, with a -16.15% CAGR growth in operating profits over the last 5 years. It also has a high debt to EBITDA ratio of 5.47 times, indicating a low ability to service debt. The return on equity (avg) is also at a low 9.13%, signifying low profitability per unit of shareholders' funds.

Moreover, there has been a decrease in promoter confidence as they have reduced their stake in the company by -19.92% over the previous quarter and currently hold only 30.18% of the company. This decrease in stake may indicate reduced confidence in the future of the business.

Overall, while Garment Mantra Lifestyle has shown positive results in the recent past, it is important to consider its weak long-term fundamentals and decreasing promoter confidence before making any investment decisions. MarketsMOJO's 'Hold' rating suggests a cautious approach towards the stock.