MarketsMOJO Downgrades Goenka Business & Finance to 'Sell' Due to Weak Fundamentals and Expensive Valuation

Goenka Business & Finance, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on March 6, 2024. This decision was based on the company's weak long-term fundamental strength, with an average return on equity (ROE) of 8.16%. Additionally, the stock is currently trading at a premium compared to its historical valuations and has underperformed the market in the past year, generating negative returns of -7.43%.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 0.3 and a ROE of -0.6. This indicates that the stock may be overvalued and not a good investment option at this time. Furthermore, while the market has seen a return of 36.15% in the past year, Goenka Business & Finance has significantly underperformed with negative returns.

However, there are some positive factors to consider. The company recently declared positive results in December 2023 after five consecutive negative quarters. Its PBDIT (quarterly) was at its highest at Rs 4.87 crore, and its operating profit to net sales (quarterly) was also at its highest at 24.30%. Additionally, its PBT less OI (quarterly) was at its highest at Rs 1.84 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with both its MACD and KST technical factors showing a bullish trend. It is also worth noting that the majority of the company's shareholders are non-institutional investors.

In conclusion, while Goenka Business & Finance may have some positive aspects, the overall recommendation from MarketsMOJO is to 'Sell' the stock due to its weak fundamental strength and expensive valuation. Investors should carefully consider these factors before making any investment decisions.