Sundaram Brake Linings Receives 'Hold' Rating from MarketsMOJO, Shows Bullish Trend and Attractive Valuations

Sundaram Brake Linings, a microcap company in the auto ancillary industry, has recently received a 'Hold' rating from MarketsMOJO on August 19, 2024. The stock has shown a bullish trend and has generated a return of 1.92% since August 16, 2024. This improvement in technical trend is supported by factors such as MACD, Bollinger Band, KST, and OBV.
The company also has an attractive valuation with a ROCE of 8.4 and an enterprise value to capital employed ratio of 2.8. It is currently trading at a discount compared to its historical valuations. In the past year, the stock has generated a return of 79.48%, while its profits have increased by 893%. This results in a PEG ratio of 0, indicating a potential undervaluation.

The majority shareholders of Sundaram Brake Linings are the promoters, which is a positive sign for investors. The company has also shown market-beating performance in the long term, outperforming BSE 500 in the last 3 years, 1 year, and 3 months.

However, the company's long-term fundamental strength is weak with a -202.94% CAGR growth in operating profits over the last 5 years. Its ability to service debt is also a concern with a poor EBIT to interest ratio of 0.33. Additionally, the company has a low profitability per unit of shareholders' funds with a return on equity of 3.65%.

In the latest quarter, the company's results have been flat with a decline in PAT (HY) by -63.43% and PBT LESS OI (Q) by -32.8%. The net sales for the quarter were also the lowest at Rs 83.71 crore.

Overall, while Sundaram Brake Linings has shown a bullish trend and has attractive valuations, its weak long-term fundamental strength and recent flat results may warrant a 'Hold' rating for now. Investors should keep an eye on the company's performance in the coming quarters to make an informed decision.