MarketsMOJO Upgrades Ambalal Sarabhai Enterprises to 'Hold' Rating Based on Strong Debt Servicing Ability and Record High Cash Reserves

Ambalal Sarabhai Enterprises, a microcap pharma company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 1.02 times. Additionally, the company has shown very positive results in the last quarter, with a growth in net profit of 843.93%. Its cash and cash equivalents are also at a record high of Rs 32.90 crore, while its net sales and PBDIT have reached their highest levels at Rs 54.35 crore and Rs 5.73 crore respectively.
Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, KST, and DOW indicating a bullish trend. The majority of the shareholders are non-institutional investors, and the stock has outperformed the market (BSE 500) with a return of 132.03% in the last year, compared to the market's return of 35.99%.

However, the company's long-term growth has been poor, with net sales growing at an annual rate of only 2.71% and operating profit at -6.08% over the last 5 years. Its ROCE of 1.8 also indicates a very expensive valuation, with an enterprise value to capital employed ratio of 2.6. The stock is currently trading at a premium compared to its average historical valuations. Despite its impressive return in the past year, the company's profits have declined by -40.9%.

Overall, while Ambalal Sarabhai Enterprises has shown strong financial performance in the last quarter and has a bullish technical outlook, its long-term growth and expensive valuation may be a cause for concern. Investors are advised to hold onto their positions for now and monitor the company's performance closely.