Menon Bearings Receives 'Hold' Rating, Shows Strong Debt Servicing Ability but Poor Long-Term Growth

Menon Bearings, a microcap company in the auto ancillary industry, 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 0.54 times. However, the company has shown poor long-term growth, with net sales growing at an annual rate of 3.90% and operating profit at 5.47% over the last 5 years.
In the latest quarter, Menon Bearings reported flat results with its PBDIT(Q) at the lowest of Rs 9.50 crore, OPERATING PROFIT TO NET SALES (Q) at the lowest of 18.45%, and PBT LESS OI(Q) at the lowest of Rs 6.38 crore. The stock is also currently in a Mildly Bearish range, with its technical trend deteriorating from Mildly Bullish on 14-Feb-24. The Bollinger Band and KST technical factors are also Bearish.

With a ROE of 21.1, Menon Bearings has an expensive valuation with a 5.5 Price to Book Value. However, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, the stock has generated a return of 29.10%, but its profits have fallen by -6%.

It is worth noting that despite its small size, domestic mutual funds hold only 0% of Menon Bearings. This could signify that they are not comfortable with the current price or the business, as domestic mutual funds have the capability to conduct in-depth on-the-ground research on companies. Overall, while Menon Bearings may have some positive aspects, it is important for investors to carefully consider all factors before making any investment decisions.