Hardcastle & Waud Mfg Co Receives 'Hold' Rating After Consistent Positive Results

Hardcastle & Waud Mfg Co, a microcap company in the paints industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company has consistently shown positive results for the last four quarters. In fact, their profits after tax have grown by an impressive 152.24% and their return on capital employed is at its highest at 6.79%. Additionally, their PBDIT (profit before depreciation, interest, and taxes) for the last quarter was also at its highest at Rs 1.12 crore.
From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from mildly bullish to bullish on October 24, 2024. This can be attributed to multiple factors such as MACD, Bollinger Band, and KST.

The majority shareholders of Hardcastle & Waud Mfg Co are the promoters, indicating their confidence in the company's performance. And their confidence is not unfounded, as the stock has outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of 154.26%.

However, the company's long-term fundamental strength is weak, with a CAGR growth of only 32.28% in operating profits over the last 5 years. Their ability to service debt is also a concern, with a poor EBIT to interest ratio of 0.85. This signifies that the company may struggle to meet its debt obligations. Additionally, their return on equity is at a low 2.85%, indicating low profitability per unit of shareholders' funds.

The stock is currently trading at a very expensive valuation, with a price to book value of 1.6. However, it is trading at a fair value compared to its historical valuations. While the stock has generated a high return of 154.26% in the last year, its profits have only risen by 117.2%, resulting in a low PEG ratio of 0.2.

In conclusion, while Hardcastle & Waud Mfg Co has shown positive results and a bullish trend in the short term, its long-term fundamental strength and high valuation may be a cause for concern. Investors are advised to hold onto their positions for now and keep an eye on the company's performance in the future.