MarketsMOJO Downgrades Mahindra & Mahindra Financial Services to 'Sell' Due to Poor Growth and Expensive Valuation

Mahindra & Mahindra Financial Services, a largecap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-10-22. This decision was based on several factors, including poor long-term growth with net sales only increasing by 8.68% annually and operating profit at 6.84%. Additionally, the company's ROE of 9.7 and price to book value of 1.7 indicate an expensive valuation.
Furthermore, the stock has been trading at a premium compared to its historical valuations and has underperformed the market in the last year with a return of only 1.44%. In contrast, the market (BSE 500) has generated a return of 31.91%.

On a positive note, Mahindra & Mahindra Financial Services has declared positive results for the last three consecutive quarters, with the highest net sales of Rs 4,465.15 crore and a growth of 44.14% in PBT LESS OI. The company also has a high dividend payout ratio of 40.24%.

However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has deteriorated from mildly bullish on 22-Oct-24 and has generated a return of -2.71% since then.

It is also worth noting that the stock has a high institutional holding of 40.76%, which suggests that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

In conclusion, while Mahindra & Mahindra Financial Services has shown positive results in the last few quarters, the stock's expensive valuation and underperformance in the market make it a 'Sell' according to MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.