Scan Steels Downgraded to 'Hold' by MarketsMOJO Due to Mixed Performance and Technical Trends

Scan Steels, a microcap company in the steel industry, has recently been downgraded to a 'Hold' by MarketsMOJO on October 3rd, 2024. This decision was based on the company's recent financial results and technical trends.
Despite a 79.65% growth in net profit, the company's overall performance has been deemed as only 'Very Positive' for the quarter ending in June 2024. However, it is worth noting that Scan Steels has declared positive results for the last two consecutive quarters, with its PBDIT(Q) and OPERATING PROFIT TO NET SALES(Q) being the highest at Rs 24.05 cr and 10.30%, respectively. Additionally, its PBT LESS OI(Q) was also the highest at Rs 17.84 cr.

On the technical front, the trend for Scan Steels is currently sideways, indicating no clear price momentum. However, there has been a slight improvement since September 30th, 2024, with a 0.36% return generated since then.

In terms of valuation, Scan Steels is considered to be very attractive with a ROCE of 6.6 and an enterprise value to capital employed ratio of 0.9. The stock is also trading at a discount compared to its average historical valuations. Despite this, the company has underperformed the market in the last year, with a return of only 24.89% compared to the market's (BSE 500) return of 36.98%.

It is worth noting that the majority of shareholders in Scan Steels are non-institutional investors. Furthermore, the company has shown poor long-term growth with an annual rate of -22.65% for operating profit over the last 5 years.

In conclusion, while Scan Steels has shown positive results in the recent quarter, its overall performance and technical trends have led to a 'Hold' rating from MarketsMOJO. The company's underperformance in the market and lack of long-term growth may also be a cause for concern for potential investors.