MarketsMOJO downgrades Ashirwad Capital to 'Sell' due to weak fundamentals

Ashirwad Capital, a microcap finance company, has recently received a 'Sell' rating from MarketsMOJO on April 15, 2024. This downgrade is based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 6.41% and poor long-term growth, with an annual operating profit growth rate of 7.77%.
Despite positive results in December 2023, with a higher PAT (HY) of Rs 1.16 crore and the highest PBDIT (Q) and PBT LESS OI (Q) at Rs 0.78 crore and Rs 0.77 crore respectively, the stock is still considered a 'Sell' due to its technical indicators. It is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST showing bullish signals.

However, the stock does have a fair valuation with a Price to Book Value of 2.7 and an ROE of 10.9. It is currently trading at a premium compared to its average historical valuations. In the past year, the stock has generated a return of 105.13%, while its profits have only risen by 65%. This gives the company a PEG ratio of 0.3, indicating that it may be overvalued.

One positive aspect for Ashirwad Capital is the increasing participation of institutional investors. They have increased their stake in the company by 0.83% in the previous quarter and now collectively hold 0.83% of the company. This suggests that these investors, who have better resources and capabilities to analyze company fundamentals, see potential in Ashirwad Capital.

In terms of market performance, Ashirwad Capital has been beating the market in the long term as well as the near term. Along with generating a return of 105.13% in the last year, the stock has also outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. This could be a positive sign for investors looking for long-term growth potential.

Overall, while Ashirwad Capital may have some positive aspects, the recent 'Sell' rating from MarketsMOJO and the company's weak long-term fundamentals may be cause for concern for potential investors. It is important to carefully consider all factors before making any investment decisions.