Manappuram Finance downgraded to 'Hold' despite strong fundamentals and positive results

Manappuram Finance, a midcap finance company, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on the company's strong long-term fundamental strength, with an average Return on Equity (ROE) of 20.30%. The company has also 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) is also at its highest at Rs 1,641.78 crore.
Despite its attractive valuation with a 1.1 Price to Book Value and trading at a discount compared to its historical valuations, the stock has been downgraded to 'Hold' due to its recent technical trend. The stock is currently in a mildly bearish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bearish trend. This has resulted in the stock underperforming the market in the last 1 year, with a return of only 9.21%, compared to the market's (BSE 500) return of 31.79%.

However, the stock still has high institutional holdings at 41.33%, indicating that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors. This could potentially lead to a change in the stock's trend in the future. Overall, while the stock may not be performing as well as the market currently, its strong long-term fundamentals and attractive valuation make it a hold for now.