Mangalam Drugs and Organics Upgraded to 'Hold' by MarketsMOJO, Positive Results in Recent Quarter

Mangalam Drugs and Organics, a microcap pharmaceutical company, has recently been upgraded to a 'Hold' by MarketsMOJO. This decision was based on the company's positive results in March 2024, with the highest operating profit to interest ratio of 2.96 times, net sales of Rs 102.24 crore, and PBDIT of Rs 11.71 crore. However, the technical trend for the stock is currently sideways, indicating no clear price momentum.
Despite this, the stock has shown improvement since May 23, 2024, when it was rated as mildly bearish. It has generated a return of -3.74% since then. With a ROCE of 1.2, the stock is considered to have an attractive valuation, with an enterprise value to capital employed ratio of 1.1. It is also trading at a discount compared to its average historical valuations.

However, the company's profitability per unit of shareholders' funds is low, with a return on equity of 8.64%. This is due to its high debt to EBITDA ratio of 2.77 times, indicating a low ability to service debt. In the last 5 years, the company has also shown poor long-term growth, with net sales growing at an annual rate of 10.12% and operating profit at 1.43%.

In the past year, Mangalam Drugs and Organics has underperformed the market, generating a return of only 11.07%, compared to the market's return of 37.32%. The majority shareholders of the company are its promoters. Overall, while the company has shown positive results in the recent quarter, its long-term growth and ability to service debt may be cause for concern. Investors are advised to hold onto their stocks for now and monitor the company's performance closely.