Kirloskar Industries Receives 'Hold' Rating from MarketsMOJO for Strong Debt Management and Attractive Valuation

Kirloskar Industries, a midcap diversified company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the company's strong ability to service debt, healthy long-term growth, and attractive valuation.
One of the key factors contributing to the 'Hold' rating is the company's low Debt to EBITDA ratio of 0.89 times, indicating a strong ability to manage its debt. Additionally, Kirloskar Industries has shown consistent growth in its Net Sales and Operating Profit, with annual rates of 24.16% and 41.87%, respectively.

Technically, the stock is currently in a Mildly Bullish range, with the trend improving from Mildly Bearish on 11-Nov-24. The Bollinger Band, a key technical indicator, has also been Bullish since 11 Nov 2024.

Moreover, with a ROCE of 11.7 and an attractive valuation of 1.1 Enterprise value to Capital Employed, the stock is trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 52.03%, while its profits have increased by 0.2%.

However, the company did report negative results in Jun 24, with a 50% decrease in PAT(Q) and the lowest ROCE(HY) at 12.16%. The OPERATING PROFIT TO INTEREST (Q) also saw a decline, reaching its lowest at 5.30 times.

It is worth noting that despite its size, domestic mutual funds hold only 0.08% of Kirloskar Industries. This could indicate that they are either not comfortable with the current price or have concerns about the company's business. However, domestic mutual funds have the capability to conduct in-depth research, making their small stake a significant factor to consider.

Overall, while Kirloskar Industries has shown consistent returns over the last 3 years and has outperformed BSE 500, the recent negative results and low stake from domestic mutual funds suggest a cautious approach for investors. MarketsMOJO's 'Hold' rating reflects a neutral stance on the stock, considering both its strengths and weaknesses.