MarketsMOJO Downgrades Alankit to 'Sell' Due to Weak Long-Term Fundamentals and Expensive Valuation

Alankit, a microcap company in the finance/NBFC industry, has recently received a 'Sell' rating from MarketsMOJO on September 11, 2024. This downgrade is due to weak long-term fundamental strength, with an average Return on Equity (ROE) of 11.77% and poor long-term growth, with an annual rate of -12.41% for operating profit.
The stock is also considered to have a very expensive valuation, with a price to book value of 2.5 and trading at a premium compared to its historical valuations. In the past year, the stock has generated a return of 114.79%, but its profits have only risen by 45.4%, resulting in a PEG ratio of 1.4.

One notable factor is that despite its size, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the stock's price or the business itself, as they have the capability to conduct in-depth research on companies.

On a positive note, Alankit has shown strong results in June 2024, with the highest operating cash flow of Rs 9.60 crore and a growth of 72.24% in PBT less OI(Q) at Rs 5.46 crore. Its PAT(Q) has also grown by 56.4% at Rs 7.40 crore.

Technically, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend. In the long term, Alankit has outperformed the BSE 500 index, generating 114.79% returns in the last year and beating the index in the last 3 years, 1 year, and 3 months.

Overall, while Alankit may have shown positive results in the short term, its weak long-term fundamentals and expensive valuation have led to a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any decisions regarding this microcap company in the finance/NBFC industry.