MarketsMOJO Downgrades K Z Leasing & Finance to 'Sell' Due to Weak Long-Term Fundamentals and Reliance on Non-Operating Income

K Z Leasing & Finance, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 20, 2024. This decision was based on the company's weak long-term fundamental strength, as it has been operating at a loss and has shown poor growth in its operating profit.
In the latest quarter, the company's profits have fallen by -205.1%, with a PBT LESS OI(Q) of Rs -0.36 crore. Additionally, its non-operating income is 112.46% of its PBT, indicating a reliance on non-operating sources for profits.

While the stock is currently in a mildly bullish range, there are multiple factors that suggest a bullish trend, such as MACD, Bollinger Band, KST, and OBV. However, with a ROE of 8.1 and a price to book value of 0.5, the stock is considered to be trading at an attractive valuation.

It is worth noting that the stock has consistently outperformed the BSE 500 index in the last three annual periods, with a return of 42.97% in the past year. However, its profits have fallen by -13% during the same period.

Majority shareholders of K Z Leasing & Finance are non-institutional investors. This, coupled with the company's consistent returns over the last three years, may be a cause for concern for potential investors.

In conclusion, while K Z Leasing & Finance may have shown some positive trends in its stock performance, its weak long-term fundamentals and reliance on non-operating income suggest caution for investors. MarketsMOJO's downgrade to 'Sell' serves as a warning for those considering investing in this microcap finance company.