Sakthi Sugars Receives 'Hold' Rating from MarketsMOJO After Positive Results and Fair Valuation

Sakthi Sugars, a microcap company in the sugar industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company's positive results in June 2024, with its operating profit to interest ratio reaching a high of 2.41 times and net sales at Rs 393.59 crore. Additionally, its PBDIT also reached a high of Rs 65.39 crore.
Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on September 27, 2024. Multiple factors, such as MACD, Bollinger Band, and OBV, also indicate a bullish trend for the stock.

However, Sakthi Sugars has a fair valuation with a 1.4 enterprise value to capital employed and is currently trading at a discount compared to its average historical valuations. Despite generating a return of 19.30% in the past year, its profits have risen by 49.5%.

On the other hand, the company's high debt, with a debt-equity ratio of 6.5 times, indicates weak long-term fundamental strength. Its ability to service debt is also low, with a high debt to EBITDA ratio of 13.90 times. This has resulted in negative ROE for the company.

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 the last year, Sakthi Sugars has underperformed the market, with a return of 19.30% compared to the market's (BSE 500) return of 40.53%. While the company has shown positive results, its high debt and pledged shares may be a cause for concern for investors. Therefore, MarketsMOJO has upgraded its rating to 'Hold' for Sakthi Sugars.