MarketsMOJO Upgrades Prima Plastics to 'Hold' Rating Due to Technical Improvement and Attractive Valuation

Prima Plastics, a microcap company in the plastic products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the stock has shown a technical improvement, moving from a Mildly Bearish trend to a Mildly Bullish one on August 16, 2024. Additionally, the Bollinger Band, a key technical factor, has been Bullish since the same date.
One of the main reasons for this upgrade is the company's attractive valuation. With a ROCE (Return on Capital Employed) of 13.6 and an Enterprise value to Capital Employed ratio of 1.3, Prima Plastics is trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 29.08%, while its profits have increased by 14.9%. This gives the company a PEG (Price/Earnings to Growth) ratio of 0.6, indicating a potential undervaluation.

However, Prima Plastics has some concerns when it comes to management efficiency and long-term growth. The company's majority shareholders are its promoters, but the ROCE is low at 6.81%, indicating poor profitability per unit of total capital. Additionally, the company has only seen a 6.53% annual growth in net sales over the last 5 years, which is relatively flat.

In the most recent quarter, Jun 24, Prima Plastics reported poor results with the lowest PBDIT (Profit Before Depreciation, Interest, and Taxes) at Rs 4.76 crore and the lowest operating profit to net sales ratio at 11.62%. While the stock may have potential for growth, it is important to consider these factors before making any investment decisions.