Bank of Maharashtra downgraded to 'Hold' despite strong lending practices and growth

Bank of Maharashtra, one of the leading public banks in India, has recently been downgraded to a 'Hold' by MarketsMOJO on October 17, 2024. This decision was based on the company's strong lending practices, with a low Gross NPA ratio of 2.47%. However, the company's stock is currently trading at a premium compared to its historical valuations.
Despite this, Bank of Maharashtra has shown healthy long-term growth, with an annual net profit growth rate of 27.69%. In fact, the company has declared positive results for the last 16 consecutive quarters, with the lowest Gross NPA ratio of 1.84% and the highest Net Interest Income of Rs 2,806.76 crore in the September 2024 quarter. Its operating cash flow for the year is also at a record high of Rs 11,596.79 crore.

With a ROA of 1.5, the company has a fair valuation with a price to book value of 1.8. However, the stock is currently in a bearish range and its technical trend has deteriorated from mildly bearish to bearish on October 10, 2024. The MACD and KST technical factors also indicate a bearish trend.

In the past year, Bank of Maharashtra's stock has underperformed the market, generating a return of 13.48% compared to the BSE 500 index's return of 33.09%. Despite its strong fundamentals, the stock's PEG ratio of 0.3 suggests that it may not be a good investment option at its current premium price. Investors are advised to hold their positions and monitor the stock's performance closely.