Sarveshwar Foods Receives Upgraded Stock Call from MarketsMOJO, Showing Strong Financial Performance

Sarveshwar Foods, a smallcap FMCG company, has recently received an upgraded stock call from MarketsMOJO. The company's stock has been upgraded to 'Hold' on 9th September 2024. This upgrade is based on the positive results declared by the company for the last four consecutive quarters.
The company's profits have shown significant growth, with PAT (HY) at Rs 7.23 crore, growing at 53.50%, and PBT LESS OI (Q) at Rs 3.67 crore, growing at 49.19%. Additionally, the company's debt-equity ratio (HY) is at its lowest at 1.18 times, indicating a strong financial position.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its technical trend from mildly bullish on 9th September 2024. Multiple factors, such as MACD, Bollinger Band, and KST, are also bullish for the stock.

Sarveshwar Foods has also outperformed the market (BSE 500) with a return of 156.17% in the last year, compared to the market's return of 33.83%. However, the company's long-term fundamental strength is weak, with a -5.31% CAGR growth in operating profits over the last five years. The company also has a high debt to EBITDA ratio of 8.70 times, indicating a low ability to service debt. Additionally, the company's return on equity (avg) is at 4.92%, signifying low profitability per unit of shareholders' funds.

The stock is currently trading at an expensive valuation with a 2.4 enterprise value to capital employed and is higher than its average historical valuations. While the stock has shown a significant return in the past year, its profits have only risen by 115%, resulting in a PEG ratio of 0.8.

Moreover, institutional investors have decreased their stake in the company by -1.05% over the previous quarter and collectively hold 0% of the company. This decrease in participation by institutional investors may indicate a lack of confidence in the company's fundamentals.

Overall, while Sarveshwar Foods has shown strong financial performance in the past year, its long-term fundamental strength and valuation may be a cause for concern. Investors are advised to hold the stock and monitor its performance closely.