Sakthi Sugars Receives 'Hold' Rating from MarketsMOJO After Positive Q2 Results

Sakthi Sugars, a microcap company in the sugar industry, has recently received a 'Hold' rating from MarketsMOJO on October 14, 2024. This upgrade comes after the company's positive results in the quarter ending June 2024, with a significant growth in its profit after tax at 333.9%. The company's operating profit to interest ratio has also reached its highest at 2.41 times, while its net sales have increased to Rs 393.59 crore.
From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from mildly bullish on October 8, 2024. Multiple factors, such as MACD, Bollinger Band, and OBV, indicate a bullish trend for the stock.

However, with a ROCE of 4.1, the stock is fairly valued with an enterprise value to capital employed ratio of 1.4. It is also trading at a discount compared to its average historical valuations. Over the past year, the stock has generated a return of 30.08%, while its profits have increased by 49.5%.

On the other hand, Sakthi Sugars has a weak long-term fundamental strength due to its high debt, with a debt-equity ratio of 6.5 times. The company also has a low ability to service its debt, with a debt to EBITDA ratio of 13.90 times. This has resulted in the company reporting losses and a negative ROE.

Moreover, 76.79% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. The proportion of pledged holdings has also increased by 6.02% over the last quarter.

In conclusion, while Sakthi Sugars has shown positive growth in its recent results and has a bullish technical trend, its high debt and negative ROE may be a cause for concern. Investors are advised to hold onto their positions and monitor the company's performance closely.