Porwal Auto Components Receives 'Hold' Rating from MarketsMOJO After Positive Results

Porwal Auto Components, a microcap company in the castings/forgings industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company's positive results in December 2023, with a growth of 285.5% in PBT LESS OI(Q) at Rs 1.33 crore and the highest NET SALES(Q) and PBDIT(Q) at Rs 40.13 crore and Rs 3.55 crore respectively.
The stock is currently in a bullish range and the technical trend has improved from mildly bullish on 18-Apr-24. Multiple factors such as MACD, Bollinger Band, and KST are also indicating a bullish trend for the stock.

Majority shareholders of Porwal Auto Components are non-institutional investors. The company has shown a market-beating performance in the long term as well as the near term, with a return of 146.92% in the last year and outperforming BSE 500 in the last 3 years, 1 year, and 3 months.

However, the company's long-term fundamental strength is weak with a -25.31% CAGR growth in operating profits over the last 5 years. Its ability to service debt is also poor with a low EBIT to Interest (avg) ratio of 0.91. The company's Return on Equity (avg) is at 3.97%, indicating low profitability per unit of shareholders' funds.

At a ROE of 3.4, the stock is currently trading at an expensive valuation with a 1.4 price to book value. However, it is still at a discount compared to its average historical valuations. Despite generating a return of 146.92% in the past year, the company's profits have only risen by 263%, resulting in a low PEG ratio of 0.1.

Overall, MarketsMOJO's 'Hold' rating for Porwal Auto Components suggests a neutral stance for investors. While the stock has shown a strong performance in the past year, its long-term fundamentals and valuation may be a cause for concern. Investors are advised to do their own research and make informed decisions before investing in the stock.