Gulshan Polyols Receives 'Hold' Rating After Positive Q2 Results, Technical Indicators Show Bullish Trend

Gulshan Polyols, a smallcap company in the chemicals industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported positive results in the quarter ending June 2024. The company's PBT LESS OI(Q) has grown by 176.9%, PAT(Q) has grown by 118.2%, and NET SALES(Q) has grown by 32.0%.
Technically, the stock is in a bullish range and the technical trend has improved from mildly bullish on 16th October 2024. Multiple factors such as MACD, Bollinger Band, and KST are also indicating a bullish trend for the stock.

However, the company's long-term fundamental strength is weak with a -8.10% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.72 times, indicating a low ability to service debt. The return on equity (avg) of 3.01% also signifies low profitability per unit of shareholders' funds.

The stock is currently trading at a discount compared to its average historical valuations, but with a ROCE of 2.8, it is considered to have an expensive valuation with a 1.9 enterprise value to capital employed. In the past year, while the stock has generated a return of 3.75%, its profits have fallen by -42%.

It is also worth noting that despite being a smallcap company, domestic mutual funds hold only 1.19% of the company. This could signify that they are not comfortable with the current price or the business, as domestic mutual funds have the capability to conduct in-depth research on companies.

In the last 1 year, Gulshan Polyols has underperformed the market, generating a return of 3.75% compared to the market (BSE 500) returns of 35.33%. With this in mind, MarketsMOJO has upgraded the stock to a 'Hold' rating, suggesting a neutral stance for investors.