Manappuram Finance downgraded to 'Hold' by MarketsMOJO due to technical trend and underperformance

Manappuram Finance, a midcap finance company, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on the company's current performance and future potential. With a strong long-term fundamental strength, Manappuram Finance has an average Return on Equity (ROE) of 20.30%. In fact, the company has declared positive results for the last 8 consecutive quarters, with a PAT (HY) of Rs 1,116.15 crore, growing at 22.75%, and a NET SALES (Q) of Rs 2,488.22 crore, the highest in its history. Additionally, its PBDIT (Q) has also reached its highest at Rs 1,641.78 crore.
However, the technical trend for Manappuram Finance is currently sideways, indicating no clear price momentum. This trend has deteriorated from being mildly bullish on 22-Oct-24 and has generated -5% returns since then. Despite this, the company's ROE of 19 makes it an attractive valuation with a 1 Price to Book Value. It is also trading at a fair value compared to its average historical valuations. In the past year, while the stock has generated a return of -1.31%, its profits have risen by 31.4%, resulting in a PEG ratio of 0.2.

One of the reasons for the downgrade to 'Hold' is the high institutional holdings at 41.33%. These investors have better capability and resources to analyze the fundamentals of companies than most retail investors. However, Manappuram Finance has shown below par performance in the long term as well as the near term. Along with generating -1.31% returns in the last year, the stock has also underperformed BSE 500 in the last 3 years, 1 year, and 3 months.

Overall, while Manappuram Finance has strong fundamentals and attractive valuations, its technical trend and below par performance in the market have led to its downgrade to a 'Hold' by MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.