OnMobile Global downgraded to 'Hold' by MarketsMOJO due to low Debt to Equity ratio and mixed long-term growth

OnMobile Global, a smallcap IT software company, has recently been downgraded to a 'Hold' by MarketsMOJO on January 24, 2024. This decision was based on the company's low Debt to Equity ratio, which is currently at 0 times.
However, the company has shown positive results in the last two consecutive quarters, with a growth in Operating Profit of 3.87%. In the quarter ending September 23, the company declared Very Positive results, with PBT LESS OI(Q) growing at 248.1% and PAT(Q) growing at 94.5%. The company's highest Operating CF(Y) at Rs 44.36 Cr is also a positive sign.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, Bollinger Band, and OBV being Bullish.

On the other hand, the company has shown poor long-term growth, with Net Sales growing at an annual rate of -2.60% and Operating Profit at -33.89% over the last 5 years. Its ROE of 3.9 also indicates an expensive valuation, with a Price to Book Value of 1.8. The stock is currently trading at a premium compared to its average historical valuations.

Despite generating a return of 20.70% in the past year, the company's profits have only risen by 40.3%, resulting in a PEG ratio of 1.2.

It is worth noting that despite being a smallcap company, domestic mutual funds hold only 0% of OnMobile Global. This could signify that they are either not comfortable with the current price or have not conducted in-depth research on the company.

Overall, while the company has shown positive results in the recent quarters, its long-term growth and expensive valuation may be a cause for concern. Investors are advised to hold their position on OnMobile Global for now.