Intellect Design Arena downgraded to 'Sell' by MarketsMOJO after negative results

Intellect Design Arena, a midcap IT software company, has recently been downgraded to 'Sell' by MarketsMOJO. This decision was based on the company's negative results in June 2024, with its DEBTORS TURNOVER RATIO(HY) at a low of 4.52 times and NET SALES(Q) at Rs 606.34 cr. Additionally, PBDIT(Q) was also at its lowest at Rs 120.71 cr.
The stock is currently in a Mildly Bearish range, with its technical trend deteriorating from Mildly Bullish on 03-Oct-24. Since then, it has generated -4.96% returns. The Bollinger Band and KST technical factors are also Bearish, indicating a potential downward trend.

In the last 1 year, Intellect Design Arena has underperformed the market, with a return of 25.57% compared to the market's (BSE 500) returns of 36.98%. However, the company has a low Debt to Equity ratio (avg) of 0.03 times and has shown healthy long-term growth with an annual rate of 46.81% in Operating profit.

With a ROE of 13.2, the stock is currently trading at an attractive valuation with a 5 Price to Book Value. It is also trading at a fair value compared to its average historical valuations. However, despite a 25.57% return in the last year, the company's profits have only risen by 3.5%, resulting in a high PEG ratio of 23.

It is worth noting that Intellect Design Arena has a high institutional holding of 32.76%, indicating that these investors have better capability and resources to analyze the company's fundamentals. Their stake has also increased by 1.12% over the previous quarter, showing potential confidence in the company's future prospects. However, considering the recent downgrade by MarketsMOJO and the company's negative results, it may be wise for investors to approach this stock with caution.