Lorenzini Apparels Receives 'Hold' Rating from MarketsMOJO Based on Technical Trend Improvement

Lorenzini Apparels, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the stock's technical trend, which has improved from sideways to mildly bullish on October 28, 2024. Additionally, the key technical factor, KST, has been bullish since the same date.
The majority shareholders of Lorenzini Apparels are the promoters, and the company has consistently generated returns over the last three years. In the past year, the stock has outperformed BSE 500 and has shown a return of 47.06%. However, the company's management efficiency is poor, with a low ROCE of 9.57%. This signifies low profitability per unit of total capital, including equity and debt.

Furthermore, the company's ability to service its debt is weak, with a poor EBIT to Interest ratio of 1.60. The long-term growth of the company is also poor, with net sales growing at an annual rate of 15.10% over the last five years. The return on equity is also low at 10.13%, indicating low profitability per unit of shareholders' funds.

In the latest quarter, the company's results were flat, with PBDIT(Q) at its lowest of Rs 1.40 crore and operating profit to net sales (Q) at its lowest of 9.22%. The PBT less OI(Q) was also at its lowest of Rs 0.20 crore. With an ROCE of 22.9, the company has a very expensive valuation, with an enterprise value to capital employed ratio of 13.3.

Although the stock has shown a return of 47.06% in the past year, its profits have only risen by 110%, resulting in a PEG ratio of 0.7. Overall, while Lorenzini Apparels has shown some positive trends, its management efficiency and ability to service debt are areas of concern. Investors are advised to hold the stock for now and monitor its performance closely.