Info Edge (India) Upgraded to 'Hold' Rating

Info Edge (India), a largecap IT software company, has recently been upgraded to a 'Hold' by MarketsMOJO on October 31, 2023. This decision was based on various factors, including the company's low Debt to Equity ratio, which is currently at 0 times. Additionally, the stock is currently in a Bullish range and the technical trend has improved from Mildly Bullish on November 16, 2023.
One of the key reasons for the Bullish outlook on the stock is the high institutional holdings at 49.97%. These investors have better capability and resources to analyze the fundamentals of companies, making their confidence in Info Edge (India) a positive sign for potential investors.

However, it is important to note that the company has shown poor long-term growth, with its operating profit growing at an annual rate of only 14.26% over the last 5 years. In addition, the results for September 2023 were flat, with the Profit After Tax (PAT) for the first 9 months of the year at Rs 152.55 crore, a decrease of -66.85% compared to the same period last year. The Return on Capital Employed (ROCE) for the first half of the year was also at its lowest at 1.22%.

Furthermore, the company's non-operating income for the quarter was 63.34% of the Profit Before Tax (PBT), indicating a heavy reliance on non-operating sources for its profits. With a ROE of 0.2, the stock is currently trading at a very expensive valuation with a Price to Book Value of 3.1. This is significantly higher than its average historical valuations.

Despite generating a return of 18.09% over the past year, the company's profits have fallen by -98.8%, highlighting the need for caution when considering investing in Info Edge (India). While the stock may be trading at a premium, its financial performance raises concerns about its future potential. As such, MarketsMOJO has upgraded the stock to a 'Hold' recommendation, indicating a neutral stance on its current prospects.