MarketsMOJO downgrades Winsome Textile Industries to 'Hold' after positive growth in recent financial results

Winsome Textile Industries, a microcap company in the textile industry, has recently been downgraded to a 'Hold' by MarketsMOJO on July 1, 2024. This decision was based on the company's recent financial results, which showed positive growth after six consecutive negative quarters.
In the last quarter, the company's PBT LESS OI(Q) has grown by 76.7% to Rs 8.63 crore, while its NET SALES(Q) reached a record high of Rs 218.62 crore. Additionally, the company's PBDIT(Q) also saw a significant increase, reaching its highest at Rs 25.01 crore.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Furthermore, with a ROCE of 10.7, the stock is considered to have an attractive valuation with a 0.8 Enterprise value to Capital Employed.

However, the stock is currently trading at a discount compared to its average historical valuations. While it has generated a return of 61.91% in the past year, its profits have fallen by -23.8%.

It is worth noting that the company has a high institutional holding of 30.95%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

Despite its market-beating performance, Winsome Textile Industries has a low ability to service debt, with a high Debt to EBITDA ratio of 3.14 times. This could potentially pose a risk to the company's financial stability.

Moreover, the company has a poor long-term growth rate, with Net Sales growing at an annual rate of 2.64% and Operating profit at 5.99% over the last 5 years. This signifies low profitability per unit of shareholders' funds.

In conclusion, while Winsome Textile Industries has shown positive growth in its recent financial results, the company's high debt and low long-term growth rate may have contributed to its downgrade to a 'Hold' by MarketsMOJO. Investors are advised to carefully consider these factors before making any investment decisions.