Mufin Green Finance Downgraded to 'Hold' Despite Strong Long-Term Growth

Mufin Green Finance, a smallcap finance company, has recently been downgraded to a 'Hold' by MarketsMOJO on January 9, 2024. This decision was based on the company's strong long-term fundamental strength, with a 74.93% CAGR growth in operating profits.
The company has shown healthy long-term growth, with an annual growth rate of 85.87% in net sales and 74.93% in operating profit. In fact, in the last quarter of September 2023, the company declared very positive results with a growth in operating profit of 29.4%. This trend has been consistent, with the company reporting positive results for the last four consecutive quarters. In the same quarter, the company also saw its highest net sales at Rs 21.13 crore, PBDIT at Rs 14.26 crore, and PBT less OI at Rs 5.37 crore.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Additionally, the stock has shown consistent returns over the last three years and has outperformed BSE 500 in each of the last three annual periods.

However, with a ROE of 7.7, the stock is currently trading at a very expensive valuation with a price to book value of 15.9. This is significantly higher than its average historical valuations. Moreover, while the stock has generated a return of 365.45% in the last year, its profits have only risen by 364.8%, resulting in a PEG ratio of 0.7.

It is also worth noting that despite its size, domestic mutual funds hold only 0% of the company. This could signify that either they are not comfortable with the current price or they have not conducted in-depth research on the company.

Overall, while Mufin Green Finance has shown strong long-term growth and positive results, its current valuation and lack of interest from domestic mutual funds may warrant a 'Hold' rating for now. Investors should keep an eye on the company's future performance and conduct their own research before making any investment decisions.