Samrat Pharmachem downgraded to 'Hold' by MarketsMOJO, despite strong growth and performance

Samrat Pharmachem, a microcap pharmaceutical company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 14, 2024. This decision was based on various factors, including the company's high management efficiency with a ROCE of 26.80% and its strong ability to service debt with a low Debt to EBITDA ratio of 0.67 times. Additionally, the company has shown healthy long-term growth with an annual growth rate of 20.12% in Net Sales and 33.25% in Operating profit.
In the latest quarter, Samrat Pharmachem declared very positive results with a growth in Operating Profit of 92.12%. The company has also consistently shown positive results for the last two quarters. Its PBT LESS OI(Q) has grown at an impressive rate of 682.5%, while NET SALES(HY) has grown at 29.09%. Furthermore, PBDIT(Q) reached its highest at Rs 2.58 cr.

Technically, the stock is currently in a mildly bullish range, with both MACD and KST technical factors also showing a bullish trend. The majority shareholders of the company are the promoters, indicating their confidence in the company's performance.

Samrat Pharmachem has also shown market-beating performance in both the long-term and near-term. In the last year, the stock has generated a return of 40.72%, outperforming BSE 500. However, with a ROE of 5.6, the stock is currently trading at a very expensive valuation with a 2.6 Price to Book Value. It is also trading at a premium compared to its average historical valuations. Additionally, while the stock has shown impressive returns, its profits have fallen by -54.1% in the past year.

Overall, while Samrat Pharmachem has shown strong growth and performance, its current valuation and recent decline in profits may warrant a 'Hold' rating for now. Investors should keep an eye on the company's future results and market trends before making any investment decisions.