Alankit Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals and Expensive Valuation

Alankit, a microcap finance and NBFC company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 11.77% and poor long-term growth as its operating profit has declined by an annual rate of -12.41%.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 1.9 and a ROE of 7.8. This is significantly higher than its average historical valuations. Additionally, while the stock has seen a return of 102.23% in the past year, its profits have only increased by 31.9%, resulting in a high PEG ratio of 2.6.

However, there are some positive factors to consider. Alankit has shown positive results in the March 2024 quarter, with a 40.6% growth in PAT (Q) and the highest cash and cash equivalents (HY) at Rs 68.27 crore. Its PBDIT (Q) is also at its highest at Rs 10.37 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with both its MACD and KST technical factors showing a bullish trend. Furthermore, there has been a rise in promoter confidence, with promoters increasing their stake in the company by 2.13% in the previous quarter and currently holding 54.15% of the company. This is a positive sign of their confidence in the future of the business.

Despite the recent downgrade, Alankit has still outperformed the market (BSE 500) with a return of 102.23% in the last year, compared to the market's return of 38.95%. However, investors should carefully consider the company's weak long-term fundamentals and expensive valuation before making any investment decisions.