MarketsMOJO Upgrades Menon Bearings to 'Hold' Based on Strong Debt Servicing Ability

Menon Bearings, a microcap company in the auto ancillary industry, has recently been upgraded to a 'Hold' by MarketsMOJO on September 3, 2024. This upgrade is based on the company's strong ability to service its debt, with a low Debt to EBITDA ratio of 0.54 times.
Technically, the stock is currently in a Mildly Bullish range, with the trend improving from Sideways on September 3, 2024. Another positive technical factor is the KST (Know Sure Thing) indicator, which has been Bullish since September 3, 2024.

However, the company has shown poor long-term growth, with Net Sales growing at an annual rate of only 2.83% and Operating profit at 5.47% over the last 5 years. In the latest quarter, the company's profits have also fallen by -27.73%.

With a ROE (Return on Equity) of 15.8, Menon Bearings currently has an expensive valuation, with a Price to Book Value of 4.8. This is higher than its average historical valuations. Additionally, over the past year, while the stock has generated negative returns of -18.42%, the market (BSE 500) has generated positive returns of 38.66%.

It is also worth noting that despite being a microcap company, domestic mutual funds hold only 0% of Menon Bearings. This could indicate that they are either not comfortable with the current price or the business itself.

In conclusion, while Menon Bearings has shown some positive technical indicators and a strong ability to service its debt, it has also underperformed the market and shown poor long-term growth. Investors may want to hold off on investing in this company until there is more positive growth and a better valuation.