Shri Jagdamba Polymers Downgraded to 'Hold' by MarketsMOJO Despite Positive Quarter Results

Shri Jagdamba Polymers, a microcap company in the packaging industry, has recently been downgraded to a 'Hold' by MarketsMOJO on August 30, 2024. This decision was based on various factors, including the company's high management efficiency with a ROCE of 39.48% and its strong ability to service debt with a low Debt to EBITDA ratio of 0.31 times.
In addition, the company has shown positive results in the quarter ending June 2024, with its net sales reaching a record high of Rs 121.72 crore and its profits at Rs 9.53 crore. The EPS also saw a significant increase, reaching Rs 10.83. However, despite these positive indicators, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, KST, and OBV showing a bullish trend.

The majority shareholders of Shri Jagdamba Polymers are the promoters, indicating their confidence in the company's performance. However, the company has shown poor long-term growth, with net sales growing at an annual rate of 13.73% and operating profit at 7.64% over the last 5 years. Additionally, with a ROE of 14.7, the stock is currently trading at an expensive valuation with a 3.1 Price to Book Value.

It is also worth noting that the stock is currently trading at a premium compared to its average historical valuations. While it has generated a return of 29.61% over the past year, its profits have only risen by 33.3%, resulting in a PEG ratio of 0.6. Overall, while Shri Jagdamba Polymers has shown positive results in the recent quarter, its long-term growth and expensive valuation may be a cause for concern for investors.