PMC Fincorp Downgraded to 'Hold' by MarketsMOJO, Despite Recent Profit Growth

PMC Fincorp, a microcap finance company, has recently been downgraded to a 'Hold' by MarketsMOJO on October 14, 2024. This decision was based on various factors, including the company's recent financial performance and technical indicators.
While PMC Fincorp reported a growth in net profit of 52.21% in June 2024, it has also declared positive results for the last 7 consecutive quarters. Its operating cash flow has been the highest at Rs 10.03 crore, and its PBT less OI has grown at an impressive rate of 167.4%. Additionally, its PAT has also seen a growth of 106.5%.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, KST, and OBV indicating a bullish trend. Furthermore, with a ROE of 13.3, the company has a very attractive valuation with a price to book value of 2.4. It is also trading at a discount compared to its average historical valuations.

In the past year, PMC Fincorp has generated a return of 203.55%, outperforming the BSE 500. However, its profits have risen by 391.1%, resulting in a PEG ratio of 0.1. The majority of the company's shareholders are non-institutional investors.

While the stock has shown market-beating performance in the long term, its fundamental strength is weak with an average ROE of 3.40%. Its long-term growth has also been poor, with an annual growth rate of 43.80% in operating profit.

In conclusion, while PMC Fincorp has shown impressive financial performance in the recent past, its long-term growth and fundamental strength may be a cause for concern. Investors are advised to hold onto their positions and monitor the company's performance closely.