IIFL Securities Receives 'Hold' Rating Despite Strong Long-Term Fundamentals

IIFL Securities, a smallcap company in the finance/NBFC industry, has recently received a 'Hold' rating from MarketsMOJO on March 4, 2024. This downgrade is based on the company's strong long-term fundamental strength, with an average return on equity (ROE) of 20.84%.
In December 2023, IIFL Securities declared very positive results with a growth in operating profit of 41.94%. The company has consistently shown positive results for the last four quarters, with its highest net sales and PBDIT (profit before depreciation, interest, and taxes) in the last quarter at Rs 558.78 crore and Rs 240.40 crore, respectively. Additionally, its operating profit to net sales ratio was at its highest at 43.02%.

Technically, the stock is in a mildly bullish range with multiple factors, such as MACD, Bollinger Band, and KST, indicating a bullish trend. With an ROE of 18.5, the stock is fairly valued with a price to book value of 3.5. However, it is currently trading at a premium compared to its average historical valuations.

Over the past year, IIFL Securities has generated a return of 172.53%, outperforming the BSE 500 index. Its profits have also increased by 72.5%, resulting in a low PEG ratio of 0.2.

Institutional investors have also shown an increasing interest in the company, with a 1.93% increase in their stake over the previous quarter. They currently hold 18.83% of the company, indicating their confidence in its fundamentals.

While IIFL Securities has shown market-beating performance in the long term, its operating profit has only grown at an annual rate of 2.77%. This may be a concern for some investors.

Overall, IIFL Securities has a strong long-term fundamental strength and has shown market-beating performance. However, its recent downgrade to a 'Hold' rating by MarketsMOJO may be a cause for caution for investors.