Pakka receives 'Hold' rating from MarketsMOJO, technical trend improves but long-term growth and pledged shares raise concerns

Pakka, a smallcap company in the paper and paper products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes as the stock has shown a mildly bullish trend and its technical trend has improved from sideways to bullish on November 29, 2024. One key technical factor, the Bollinger Band, has also been bullish since the same date.
However, the company has shown poor long-term growth with an annual operating profit growth rate of only 17.06% over the last 5 years. In addition, its results for September 2024 were flat. The company's interest has grown at a rate of 33.57%, while its ROCE (Return on Capital Employed) is at its lowest at 15.26%. The debtors turnover ratio is also at its lowest at 9.19 times.

With an ROCE of 14.4, Pakka currently has an expensive valuation with a 3 Enterprise value to Capital Employed. However, the stock is trading at a discount compared to its average historical valuations. While the stock has generated a return of 17.20% over the past year, its profits have fallen by -7.6%.

It is also worth noting that 84.99% of the promoter shares are pledged. In times of falling markets, this high percentage of pledged shares can put additional downward pressure on the stock prices.

Overall, while Pakka's technical trend has improved and the stock is trading at a discount, its poor long-term growth and high percentage of pledged shares may be cause for concern. Investors may want to hold off on investing in this smallcap company until there is more positive growth and a decrease in pledged shares.