Datamatics Global Services Downgraded to 'Sell' by MarketsMOJO on September 2, 2024

Datamatics Global Services, a smallcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 2, 2024. This decision was based on several factors, including the company's flat results in the June 2024 quarter, with the lowest cash and cash equivalents at Rs 131.25 crore and PBDIT at Rs 51.40 crore. Additionally, the operating profit to net sales ratio was also at its lowest at 13.05%.
Technically, the stock is currently in a mildly bearish range, with the technical trend deteriorating from mildly bullish on September 2, 2024. Since then, the stock has generated a negative return of -1.17%. The MACD and KST technical factors also indicate a mildly bearish trend.

One concerning aspect is that despite being a smallcap company, domestic mutual funds hold only 0.17% of the company. This could signify that they are not comfortable with the current price or the business itself, as domestic mutual funds have the capability to conduct in-depth research on companies.

In the last year, Datamatics Global Services has underperformed the market, generating a return of 22.20%, much lower than the market (BSE 500) returns of 38.49%. The company also has a low debt to equity ratio and a fair valuation with a price to book value of 3.3. However, the stock is currently trading at a premium compared to its average historical valuations.

Furthermore, while the stock has generated a return of 22.20% in the last year, its profits have fallen by -5.7%. This could be a cause for concern for investors.

In conclusion, based on the recent downgrade and various factors such as flat results, technical trends, and underperformance in the market, Datamatics Global Services may not be a favorable investment option at this time. Investors should carefully consider all the information before making any decisions.