Sangal Papers Receives 'Hold' Rating from MarketsMOJO Based on Technical Factors, Valuation Remains Attractive

Sangal Papers, a microcap company in the paper and paper products industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on various technical factors, such as the stock being in a bullish range and improvements in its technical trend.
One of the key reasons for the 'Hold' rating is the stock's attractive valuation, with a ROCE of 7.5 and a low enterprise value to capital employed ratio of 0.8. Additionally, the stock is currently trading at a discount compared to its historical valuations.

However, there are some concerns regarding the company's long-term fundamentals. The average ROCE over the last 5 years is 7.58%, indicating weak long-term fundamental strength. The company has also shown poor growth in net sales and operating profit over the last 5 years.

Furthermore, Sangal Papers has a high debt to EBITDA ratio of 3.93 times, indicating a low ability to service debt. In addition, the company's results for the quarter ending June 2024 were flat, with the lowest net sales of Rs 42.61 crore.

Investors should also take note that 38.76% of the promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets.

In the last 1 year, Sangal Papers has underperformed the market, generating a return of 22.63% compared to the market's (BSE 500) return of 34.97%. This could be a cause for concern for investors.

Overall, while the technical factors may indicate a bullish trend for Sangal Papers, the company's long-term fundamentals and underperformance in the market should be considered before making any investment decisions.