Sakthi Sugars Receives 'Hold' Rating from MarketsMOJO After Positive Results and Technical Indicators Show Bullish Trend

Sakthi Sugars, a microcap company in the sugar industry, has recently received a 'Hold' rating from MarketsMOJO on September 10, 2024. This upgrade comes after the company reported 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 saw a significant increase, reaching Rs 65.39 crore.
Technically, the stock is currently in a mildly bullish range, with its MACD and Bollinger Band technical factors also showing a bullish trend. With a ROCE of 4.1, the company's valuation is considered attractive, with an enterprise value to capital employed ratio of 1.4. Furthermore, the stock is currently trading at a discount compared to its average historical valuations.

However, Sakthi Sugars also faces some challenges. The company has a high debt-to-equity ratio of 6.5 times, indicating weak long-term fundamental strength. Its ability to service debt is also low, 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. This 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 21.54%, much lower than the market (BSE 500) returns of 34.61%. While the company has shown positive results in the recent quarter, its high debt and pledged shares may be a cause for concern for investors. As such, MarketsMOJO has upgraded its rating to 'Hold' for Sakthi Sugars.