Nippon Life India Asset Management downgraded to 'Hold' by MarketsMOJO

Nippon Life India Asset Management, a leading finance and non-banking financial company (NBFC) in the largecap industry, has recently been downgraded to a 'Hold' by MarketsMOJO on 2024-02-12. Despite having a strong long-term fundamental strength with an average Return on Equity (ROE) of 19.77%, the stock has been downgraded due to its poor long-term growth. The company has declared positive results for the last three consecutive quarters, with its highest net sales of Rs 423.32 crore and operating profit to net sales of 61.22% in the last quarter. However, its net sales have shown a negative annual growth rate of -0.65%. Technically, the stock is in a mildly bullish range with multiple factors such as MACD, Bollinger Band, KST, and OBV indicating a bullish trend. Additionally, mutual funds have increased their holdings in the company this quarter, now holding 7.43% of the company. Nippon Life India Asset Management has also shown a market-beating performance, generating a return of 114.57% in the last year, much higher than the market (BSE 500) returns of 30.22%. However, with a ROE of 24.8, the stock is currently trading at a very expensive valuation with a price to book value of 8.5. This is significantly higher than its average historical valuations. It is important to note that while the stock has shown a high return in the past year, its profits have only increased by 37.5%. This results in a PEG ratio of 0.9, indicating that the stock may be overvalued. Therefore, MarketsMOJO has downgraded the stock to a 'Hold' and recommends investors to carefully consider their options before making any investment decisions.