Arihant Capital Markets Receives 'Hold' Rating from MarketsMOJO, Long-Term Growth and Promoter Confidence a Concern

Arihant Capital Markets, a microcap company in the finance/NBFC industry, has recently received a 'Hold' rating from MarketsMOJO on February 12, 2024. This downgrade is based on the company's strong long-term fundamental strength, with an average return on equity (ROE) of 15.76%.
The company has also shown positive results in the last three consecutive quarters, with a growth in operating profit of 37.84%. In fact, its cash and cash equivalents (HY) are at a record high of Rs 336.81 crore, while its net sales (Q) and PBDIT (Q) are also at their highest levels of Rs 72.66 crore and Rs 29.51 crore, respectively.

Technically, the stock is in a mildly bullish range, with its MACD and OBV technical factors also showing a bullish trend. However, with an ROE of 12.7, the stock is currently trading at a premium compared to its average historical valuations.

Despite generating a return of 48.95% in the last year, which is higher than the market (BSE 500) returns of 30.22%, the company's poor long-term growth is a cause for concern. Its operating profit has only grown at an annual rate of 8.70%.

Moreover, there has been a decrease in promoter confidence, as they have reduced their stake in the company by -1.46% over the previous quarter and currently hold 70.18% of the company. This decrease in stake may indicate a lack of confidence in the future of the business.

In conclusion, while Arihant Capital Markets has shown positive results in the short term, its long-term growth and promoter confidence are areas that investors should keep an eye on. The 'Hold' rating from MarketsMOJO reflects the need for caution and further evaluation before making any investment decisions.