Paramount Communications Receives 'Hold' Rating After Strong Q2 Results

Paramount Communications, a smallcap company in the cable industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results for the quarter ending June 2024, with a growth in net profit of 74.12%. This marks the 12th consecutive quarter of positive results for the company.
The company's net sales have also shown a significant growth of 52.49% at Rs 321.06 crore, while PBT less OI has grown at 77.73% and PAT at 74.1%. These strong financial numbers have contributed to the stock's technical trend, which has improved from sideways to mildly bullish on 19-Aug-24. Multiple technical indicators such as MACD, Bollinger Band, KST, and OBV are also showing bullish signals for the stock.

Attractive valuation is another factor that makes the stock a 'Hold'. With a ROE of 13.7 and a price to book value of 3.9, the stock is currently trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 50.93%, while its profits have risen by 74.3%. However, the PEG ratio of the company is 2.2, indicating a slightly higher valuation.

On the other hand, the company's long-term fundamental strength is weak, with an average ROCE of 6.78%. Net sales have grown at a slow rate of 12.50% and operating profit at 3.43% over the last 5 years, indicating poor long-term growth. Additionally, the company has a high debt to EBITDA ratio of 6.08 times, which shows a low ability to service debt.

Investors should also take note that 26.52% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. However, the stock has consistently outperformed BSE 500 in the last 3 annual periods, generating a return of 50.93%. Overall, with a 'Hold' rating, investors can expect stable returns from Paramount Communications in the near future.