Dharani Finance Downgraded to 'Sell' by MarketsMOJO, Weak Fundamentals and Expensive Valuation Raise Concerns

Dharani Finance, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 11, 2024. This decision was based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 0.76% and poor long-term growth as Net Sales has grown by an annual rate of -0.96%. Additionally, with a ROE of 1.5, the company's valuation is considered to be very expensive with a 0.6 Price to Book Value.
Despite the stock's impressive return of 107.35% in the past year, its profits have only risen by 26%, resulting in a PEG ratio of 0. This indicates that the stock may be overvalued and not a good investment option.

On a positive note, Dharani Finance did show positive results in June 2024, with its PBDIT(Q), PBT LESS OI(Q), and PAT(Q) all reaching their highest levels at Rs 0.33 cr, Rs 0.31 cr, and Rs 0.31 cr respectively.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

It is worth noting that the majority of shareholders in Dharani Finance are non-institutional investors. However, the stock has still managed to outperform the market (BSE 500) with a return of 107.35% in the last year, compared to the market's return of 30.30%.

In conclusion, while Dharani Finance may have shown some positive results in the past, its weak long-term fundamentals and expensive valuation make it a risky investment option. Investors are advised to carefully consider all factors before making any decisions regarding this microcap finance company.