Indiamart Intermesh: Strong Fundamentals and Growth Potential Despite Recent Downgrade

Indiamart Intermesh, a midcap IT software company, has recently been downgraded to a 'Hold' rating by MarketsMOJO. This decision was based on the company's strong long-term fundamental strength, with an average Return on Equity (ROE) of 25.15%, and healthy long-term growth, with an annual operating profit growth rate of 107.37%. Additionally, the company has a low Debt to Equity ratio of 0 times, indicating a stable financial position.
In the last four consecutive quarters, Indiamart Intermesh has declared positive results, with its highest net sales at Rs 314.70 crore and operating profit to net sales at 28.09%. This showcases the company's consistent performance and growth potential.

Moreover, the company has a high institutional holding of 33.69%, indicating that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors. In fact, their stake has increased by 1.28% over the previous quarter, further highlighting their confidence in the company.

However, the stock is currently in a mildly bearish range, with its technical trend deteriorating from mildly bullish on 06-May-24. The MACD and KST technical factors are also mildly bearish, indicating a potential downward trend in the stock's price.

Furthermore, with a ROE of 19.3, the stock is currently trading at a very expensive valuation with a price to book value of 9.6. However, it is still trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of -7.09%, its profits have risen by 18.2%, resulting in a PEG ratio of 2.4.

Overall, Indiamart Intermesh has underperformed the market in the last year, with negative returns of -7.09% compared to the market's returns of 34.08%. However, with its strong fundamentals and growth potential, the stock may be worth considering for long-term investors.