Shri Jagdamba Polymers Receives 'Buy' Rating from MarketsMOJO, Records Strong Financial Results in Q1 2024

Shri Jagdamba Polymers, a microcap company in the packaging industry, has recently received a 'Buy' rating from MarketsMOJO. This upgrade is based on the company's high management efficiency, strong ability to service debt, and positive financial results in the quarter ending June 2024.

One of the key reasons for the 'Buy' rating is the company's high return on capital employed (ROCE) of 39.48%, indicating efficient use of capital. Additionally, Shri Jagdamba Polymers has a low debt to EBITDA ratio of 0.31 times, showcasing its strong ability to manage debt.

In the quarter ending June 2024, the company recorded its highest net sales of Rs 121.72 crore, highest profit after tax of Rs 9.53 crore, and highest earnings per share of Rs 10.83. This positive financial performance has contributed to the 'Buy' rating.

From a technical standpoint, the stock is currently in a bullish range and the trend has improved from mildly bullish to bullish on 10-Sep-24. Multiple technical indicators such as MACD, Bollinger Band, and KST also suggest a bullish outlook for the stock.

The majority shareholders of Shri Jagdamba Polymers are the promoters, indicating their confidence in the company's future prospects. However, there are some risks associated with investing in this stock. 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.

Moreover, with a return on equity (ROE) of 13.7, the stock is currently trading at a very expensive valuation with a price to book value of 3.1. This is higher than its average historical valuations, indicating a premium price. Additionally, while the stock has generated a return of 22.29% in the last year, its profits have only risen by 33.3%, resulting in a PEG ratio of 0.7.

In comparison to the market (BSE 500), Shri Jagdamba Polymers has underperformed in the last year with a return of 22.29% compared to the market's return of 34.61%. However, with the recent 'Buy' rating and positive financial results, the company may have the potential to improve its performance in the future.