Luharuka Media & Infra receives 'Hold' rating after positive Q1 results

Luharuka Media & Infra, a microcap company in the films and entertainment industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported positive results in the June 2024 quarter, with its PBDIT, PBT less OI, and PAT reaching their highest levels at Rs 0.83 cr, Rs 0.82 cr, and Rs 0.61 cr respectively.
The stock is currently in a bullish range, with its technical trend improving from mildly bullish on 27-Aug-24. This can be attributed to multiple factors such as MACD, Bollinger Band, and KST. The majority shareholders of the company are its promoters, indicating their confidence in the company's performance.

Luharuka Media & Infra has consistently outperformed the BSE 500 index in the last 3 annual periods, with a return of 54.55% in the last year alone. However, the company's long-term fundamental strength is weak, with a CAGR growth of only 18.99% in net sales over the last 5 years. Its ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 0.56.

The company's profitability per unit of shareholders' funds is also low, with a Return on Equity (avg) of 2.04%. This is reflected in its expensive valuation, with a price to book value of 6.2 and a ROE of 6.9. The stock is currently trading at a premium compared to its historical valuations.

Despite its strong performance in the past year, Luharuka Media & Infra's profits have only risen by 41%, indicating a potential slowdown in growth. Therefore, MarketsMOJO has recommended a 'Hold' rating for the stock, advising investors to carefully consider the company's weak long-term fundamentals before making any investment decisions.