Capital Trade Links Receives 'Hold' Rating After Impressive Results and Bullish Trend

Capital Trade Links, a microcap finance company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported very positive results in December 2023, with a growth in net profit of 325%. This marks the eighth consecutive quarter of positive results for the company.
The company's net sales for the half year have grown by an impressive 145.23%, with PBDIT and PAT reaching their highest levels at Rs 5.98 crore and Rs 5.61 crore respectively. The stock is currently in a bullish range and has shown a 2.63% return since the technical trend improved from mildly bullish on March 21, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, indicate a bullish trend for the stock.

The majority shareholders of Capital Trade Links are non-institutional investors. The stock has consistently generated strong returns over the last three years, outperforming the BSE 500 index in each of the last three annual periods. However, the company's long-term fundamental strength is weak, with an average return on equity (ROE) of 6.46%. Its current ROE of 18.3 indicates a very expensive valuation, with a price to book value of 5.7. The stock is currently trading at a premium compared to its historical valuations.

Despite the stock's impressive return of 71.40% in the last year, its profits have only risen by 120.3%, resulting in a low PEG ratio of 0.3. This suggests that the stock may be overvalued and investors should exercise caution before making any investment decisions. Overall, while the company has shown strong growth in recent years, its current valuation and weak long-term fundamentals warrant a 'Hold' rating from MarketsMOJO.