Parag Milk Foods Receives 'Hold' Rating from MarketsMOJO, Positive Results and Technical Factors Indicate Bullish Trend

Parag Milk Foods, a smallcap FMCG company, has recently received a 'Hold' rating from MarketsMOJO on October 4, 2024. This upgrade is based on the company's positive results in June 2024, with a growth of 135.77% in PBT LESS OI(Q) at Rs 21.29 crore and a highest ROCE(HY) of 10.29%. Additionally, the company's DEBT-EQUITY RATIO(HY) is at its lowest at 0.71 times.
Technically, the stock is in a Mildly Bullish range and has shown improvement from Mildly Bearish on October 4, 2024. The Bollinger Band and OBV technical factors are also Bullish, indicating a positive trend for the stock.

With a ROCE of 8.8, Parag Milk Foods has a Very Attractive valuation with a 2 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of -2.24% in the past year, the company's profits have increased by 49.8%, resulting in a low PEG ratio of 0.5.

However, the company's long-term fundamental strength is weak with a -10.31% CAGR growth in Operating Profits over the last 5 years. Its ability to service its debt is also poor with a low EBIT to Interest (avg) ratio of 0.31. The company's Return on Equity (avg) of 6.46% also signifies low profitability per unit of shareholders' funds.

It is worth noting that despite being a smallcap company, domestic mutual funds hold only 0.06% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

In the last 1 year, Parag Milk Foods has underperformed the market (BSE 500) with negative returns of -2.24%, while the market has generated returns of 36.68%. This could be a cause for concern for investors.

Overall, while Parag Milk Foods has shown positive results and has a technically bullish trend, its weak long-term fundamental strength and underperformance in the market may make it a 'Hold' for now. Investors should keep an eye on the company's future performance and conduct their own research before making any investment decisions.