Current Rating and Its Significance
MarketsMOJO’s Strong Sell rating for Indostar Capital Finance Ltd indicates a cautious stance towards the stock, suggesting that investors should consider avoiding new purchases or potentially reducing exposure. This rating is derived from a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical indicators. The Strong Sell grade, reflected in a Mojo Score of 28.0, signals below-average prospects relative to peers in the Non Banking Financial Company (NBFC) sector.
Here’s How the Stock Looks Today
As of 04 January 2026, Indostar Capital Finance Ltd is classified as a small-cap entity within the NBFC sector. The stock has experienced mixed performance over various time frames: a positive 2.26% gain in the last trading day and an 8.54% increase year-to-date, contrasted by a 9.36% decline over the past year and a significant 29.80% drop over six months. These figures highlight volatility and recent challenges in sustaining growth momentum.
Quality Assessment
The company’s quality grade is below average, reflecting weak long-term fundamental strength. The average Return on Equity (ROE) stands at a modest 1.36%, indicating limited profitability relative to shareholder equity. Furthermore, net sales have grown at an annualised rate of just 1.52%, while operating profit has increased by 3.37% annually. These subdued growth rates suggest that Indostar is struggling to generate robust earnings growth, which is a critical factor for investors seeking sustainable returns.
Valuation Perspective
Valuation metrics currently classify the stock as expensive, despite a Price to Book Value ratio of 0.8, which implies the stock trades at a discount relative to its book value. This apparent contradiction arises because the company’s ROE is negative at -8%, signalling that the firm is not generating adequate returns on its equity base. The stock’s valuation is also unfavourably positioned when compared to peers, with profits having fallen by a staggering 650.8% over the past year. This steep decline in profitability weighs heavily on the valuation outlook.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
Despite the challenges, the financial grade is positive, indicating some favourable aspects in the company’s recent financial trajectory. However, this positive trend is overshadowed by the overall weak long-term growth and profitability metrics. The stock’s returns over the last year have been negative at -9.36%, and it has underperformed the BSE500 index over the last three years, one year, and three months. This underperformance relative to the broader market index highlights the stock’s struggles to keep pace with sector and market benchmarks.
Technical Outlook
The technical grade is mildly bearish, reflecting cautious investor sentiment and potential downward pressure on the stock price. While the stock has shown some short-term gains, such as a 4.59% increase over the past week, the one-month and three-month returns are negative at -1.08% and -1.55%, respectively. These mixed signals suggest that technical momentum is weak and may not support a sustained rally in the near term.
Implications for Investors
For investors, the Strong Sell rating serves as a warning to carefully evaluate the risks associated with Indostar Capital Finance Ltd. The combination of below-average quality, expensive valuation relative to returns, and a mildly bearish technical outlook suggests limited upside potential. Investors should weigh these factors against their risk tolerance and portfolio objectives before considering exposure to this stock.
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Summary
Indostar Capital Finance Ltd’s current Strong Sell rating by MarketsMOJO, last updated on 11 Nov 2025, reflects a comprehensive assessment of its present-day fundamentals and market position as of 04 January 2026. The company faces significant headwinds in terms of profitability, growth, and valuation, compounded by a cautious technical outlook. While some financial trends show positivity, the overall picture advises prudence for investors considering this stock. Monitoring future developments and sector dynamics will be essential for reassessing the stock’s potential.
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