Wheels India . Upgraded to 'Hold' Rating After Strong Quarterly Results

Wheels India ., a smallcap company in the auto ancillary industry, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This upgrade comes after the company reported positive results in June 2024, with a significant growth in its PAT (HY) at Rs 62.11 crore, which is a 93.31% increase from the previous year. Additionally, its PBT LESS OI (Q) at Rs 29.49 crore has also shown a growth of 82.9%.
The company's ROCE (HY) is at its highest at 12.20%, indicating a strong performance in terms of profitability. Technically, the stock is in a mildly bullish range and the trend has improved from sideways to bullish since 14 October 2024. The key technical factor, MACD, has also been bullish since the same date.

With a ROCE of 11.1, Wheels India . has a very attractive valuation with a 1.6 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of -1.95% in the past year, the company's profits have risen by 38.1%, resulting in a PEG ratio of 0.7.

The majority shareholders of Wheels India . are its promoters, indicating their confidence in the company's performance. However, the company has weak long-term fundamental strength with an average ROCE of 8.43%. Its net sales and operating profit have also shown a low growth rate of 7.53% and 5.30% respectively over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 3.70 times, indicating a low ability to service debt.

Overall, while Wheels India . has shown positive results in the recent quarter and has a bullish technical trend, its long-term performance and ability to service debt are areas of concern. Investors are advised to hold onto their positions for now and monitor the company's performance closely.