Modern Dairies receives 'Hold' rating after positive Q1 results, but long-term concerns remain

Modern Dairies, a microcap company in the FMCG industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results for the quarter ending in March 2024, with a growth in net profit of 40.27%. This is the second consecutive quarter of positive results for the company.
The company's net sales for the half year have also seen a significant growth of 51.80%, reaching Rs 197.32 crore. Additionally, the PBDIT for the quarter was at its highest at Rs 7.46 crore, with the operating profit to net sales ratio also at its highest at 7.63%.

Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on May 22, 2024. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also indicating a bullish trend for the stock.

In the long term, Modern Dairies has outperformed the BSE 500 index and has generated a return of 117.04% in the last year. However, the company's weak long-term fundamental strength is a cause for concern, with a negative book value and poor growth in net sales and operating profit over the last 5 years.

Moreover, the company has a high debt-to-equity ratio, making it a risky investment. The stock is currently trading at a higher valuation compared to its historical average, with a PEG ratio of 0.3. Additionally, 99.95% of the promoter shares are pledged, which can put downward pressure on the stock prices in falling markets.

Overall, while Modern Dairies has shown strong performance in the near term, its long-term fundamentals and high risk factors should be considered before making any investment decisions. MarketsMOJO's 'Hold' rating reflects a neutral stance on the stock, with no recommendation for buying or selling.