MarketsMOJO Downgrades Capital Trust to 'Sell' Due to Weak Fundamentals and Expensive Valuation

Capital Trust, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 7.74%. Additionally, the company has shown poor long-term growth, with net sales growing at an annual rate of -15.53% and operating profit at -185.42%.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 1.5 and an ROE of 5.3. However, the stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of 43.30% in the past year, the company's profits have only risen by 104.4%, resulting in a low PEG ratio of 0.3.

In terms of other factors, Capital Trust has declared positive results for the last four consecutive quarters, with its highest PAT(Q) at Rs 2.02 crore, PBT LESS OI(Q) at Rs 2.56 crore, and EPS(Q) at Rs 1.25. Technically, the stock is currently in a mildly bullish range, with both its MACD and KST technical factors showing a bullish trend.

It is worth noting that the majority shareholders of Capital Trust are the promoters themselves. This may raise concerns about potential conflicts of interest and could impact the company's decision-making processes.

Overall, MarketsMOJO's downgrade of Capital Trust to a 'Sell' is based on the company's weak long-term fundamentals and expensive valuation. Investors should carefully consider these factors before making any investment decisions.