R S Software (India) Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals

R S Software (India) is a microcap IT software company that has recently been downgraded to a 'Sell' by MarketsMOJO. This downgrade is due to weak long-term fundamental strength, with an average Return on Equity (ROE) of 0% and poor long-term growth as Net Sales has only grown by an annual rate of -0.72% over the last 5 years. Additionally, the company's ability to service its debt is weak with a poor EBIT to Interest (avg) ratio of -28.83.
The stock is also considered to be very expensive with a 14 Price to Book Value and is currently trading at a discount compared to its average historical valuations. However, over the past year, the stock has generated a return of 437.42%, with profits rising by 874.1%. This has resulted in a PEG ratio of 0, indicating that the stock may be overvalued.

One concerning factor is that despite the size of the company, domestic mutual funds hold only 0.02% of the company. This could suggest that they are not comfortable with the current price or the business itself.

On a positive note, the company has declared very positive results in Jun 24 with a growth in Net Sales of 2.85%. It has also declared positive results for the last 6 consecutive quarters, with PAT(HY) at Rs 11.38 cr growing at 348.03% and OPERATING CF(Y) at its highest at Rs 12.21 Cr. Additionally, the company's ROCE(HY) is also at its highest at 41.46%.

From a technical standpoint, the stock is currently in a mildly bullish range with both MACD and KST technical factors being bullish. It has also shown market-beating performance in the long term, outperforming BSE 500 in the last 3 years, 1 year, and 3 months.

In conclusion, while R S Software (India) may have some positive factors, the recent downgrade to 'Sell' by MarketsMOJO and weak long-term fundamentals suggest that investors should approach this stock with caution.