Current Rating and Its Significance
MarketsMOJO currently assigns Affle 3i Ltd a 'Sell' rating, indicating a cautious stance towards the stock. This rating suggests that investors should consider reducing their exposure or avoid initiating new positions at present. The 'Sell' recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock's attractiveness and risk profile.
Quality Assessment
As of 16 February 2026, Affle 3i Ltd holds a 'good' quality grade. This reflects the company's solid operational fundamentals and consistent profitability. The return on equity (ROE) stands at a respectable 12.9%, indicating efficient utilisation of shareholder capital. Such a level of ROE is generally favourable and suggests that the company maintains a competent management team and a sustainable business model within the Computers - Software & Consulting sector.
Valuation Considerations
Despite the positive quality indicators, the stock is currently rated as 'very expensive' in terms of valuation. Affle 3i Ltd trades at a price-to-book (P/B) ratio of 6.8, which is significantly higher than typical industry averages and peer valuations. This premium valuation implies that the market has priced in substantial growth expectations. However, the price-earnings-to-growth (PEG) ratio of 2.6 further suggests that the stock may be overvalued relative to its earnings growth prospects, signalling potential downside risk if growth fails to meet these elevated expectations.
Financial Trend Analysis
The financial grade for Affle 3i Ltd is currently 'positive', reflecting encouraging trends in profitability and earnings growth. The latest data as of 16 February 2026 shows that the company’s profits have increased by 19.7% over the past year. This robust earnings growth is a favourable sign, indicating operational strength and effective cost management. However, despite this growth, the stock’s market performance has lagged behind broader indices, with a one-year return of only 0.82%, compared to the BSE500’s 11.06% return over the same period.
Technical Outlook
From a technical perspective, the stock is graded as 'bearish'. Recent price movements reveal a downward trend, with the stock declining 8.65% over the past month and 19.85% over the last six months. The short-term momentum appears weak, and the stock has underperformed the market consistently in recent periods. This bearish technical stance reinforces the cautious recommendation, signalling potential further downside or volatility in the near term.
Performance Summary
As of 16 February 2026, Affle 3i Ltd’s stock price has experienced mixed returns. While it gained 0.79% on the most recent trading day, it has declined 4.49% over the past week and 8.61% over the last three months. Year-to-date, the stock is down 12.56%, reflecting ongoing market pressures. Over the one-year horizon, the stock has delivered a modest 4.81% return, which is notably below the broader market benchmarks. This performance disparity highlights the challenges the stock faces despite its positive earnings trajectory.
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Implications for Investors
For investors, the 'Sell' rating on Affle 3i Ltd serves as a signal to exercise caution. The combination of a high valuation and bearish technical indicators suggests that the stock may face headwinds in the near term. While the company’s quality and financial trends remain positive, the premium price and recent price weakness could limit upside potential. Investors should carefully weigh these factors against their risk tolerance and portfolio objectives before considering exposure to this stock.
Sector and Market Context
Operating within the Computers - Software & Consulting sector, Affle 3i Ltd competes in a dynamic and rapidly evolving industry. The sector often commands premium valuations due to growth potential and technological innovation. However, such valuations also increase sensitivity to market sentiment and earnings delivery. The stock’s underperformance relative to the BSE500 index over the past year underscores the importance of valuation discipline and technical analysis in this space.
Conclusion
In summary, MarketsMOJO’s 'Sell' rating on Affle 3i Ltd reflects a balanced assessment of its current fundamentals and market conditions as of 16 February 2026. The company demonstrates solid quality and positive financial trends, but these are offset by expensive valuation and bearish technical signals. Investors should monitor the stock closely for changes in these parameters and consider alternative opportunities that offer more favourable risk-reward profiles.
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