Soma Textiles & Industries Receives 'Hold' Rating from MarketsMOJO, Despite Strong Market Performance

Soma Textiles & Industries, a microcap company in the textile industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the stock's technical trend, which has improved from Mildly Bullish to Bullish on September 17, 2024. The company's majority shareholders are its promoters.
One of the main reasons for the 'Hold' rating is the stock's market-beating performance. In the last year, it has generated a return of 68.00%, which is significantly higher than the market returns of 34.98% for BSE 500. However, the company's ability to service its debt is a concern, as it has a high Debt to EBITDA ratio of -1.00 times. This means that the company may struggle to pay off its debt obligations.

Moreover, Soma Textiles & Industries has reported losses, resulting in a negative return on capital employed (ROCE). This indicates poor long-term growth potential for the company. In the last 5 years, its net sales have grown at an annual rate of -29.06%, and operating profit has declined by -46.96%.

The company's financial results for June 2024 also show a decline, with a net profit after tax of Rs 2.74 crore, which is a decrease of -97.85% compared to the same period last year. Its PBDIT (quarterly) is at its lowest at Rs -1.14 crore, and PBT LESS OI (quarterly) is also at its lowest at Rs -1.28 crore.

Overall, the stock is considered risky due to its negative EBITDA and trading at higher valuations than its historical average. While it has generated a high return in the past year, its profits have declined significantly. Therefore, investors should carefully consider the risks before making any investment decisions regarding Soma Textiles & Industries.