Real Touch Finance Sees Shift in Market Assessment Amid Mixed Financial and Technical Signals

Financial Trend Analysis: Quarterly Strengths Amid Long-Term Challenges

Real Touch Finance’s recent quarterly results for Q2 FY25-26 reveal a continuation of positive financial momentum. The company reported its highest quarterly net sales at ₹8.67 crores, alongside a profit after tax (PAT) of ₹2.02 crores and earnings per share (EPS) reaching ₹1.59. These figures mark the twelfth consecutive quarter of positive results, signalling operational resilience in the short term.

However, when viewed over a longer horizon, the company’s financial trend presents a more nuanced scenario. The average Return on Equity (ROE) stands at 6.20%, which is modest for the non-banking financial company (NBFC) sector. While the latest quarter’s ROE of 12.2% suggests some improvement, the overall trend indicates limited long-term fundamental strength. This is further reflected in the company’s price-to-book value ratio of 1.4, which aligns with fair valuation levels relative to its peers’ historical averages.

Despite these positive quarterly results, Real Touch Finance’s stock performance has lagged behind broader market indices. Over the past year, the stock has generated a return of -29.89%, contrasting with the BSE500’s 2.66% gain during the same period. This divergence highlights the challenges faced by the company in translating operational gains into sustained market confidence.

Valuation Considerations: Fair Pricing Amid Sector Comparisons

From a valuation standpoint, Real Touch Finance is trading at levels that suggest a reasonable price relative to its book value and earnings growth. The company’s price-to-book ratio of 1.4 indicates that the market is pricing the stock close to its net asset value, which is consistent with valuations observed among comparable NBFCs.

Moreover, the company’s profits have increased by approximately 60% over the past year, despite the stock’s negative price returns. This disparity is reflected in a price/earnings to growth (PEG) ratio of 0.2, which typically signals undervaluation when earnings growth outpaces price appreciation. However, investors may be cautious due to the company’s underperformance relative to the broader market and sector indices.

Quality Assessment: Promoter Stability and Market Position

Real Touch Finance’s ownership structure is dominated by promoters, which often provides a degree of stability and alignment of interests with shareholders. The company operates within the NBFC sector, a segment that has faced regulatory and credit challenges in recent years. While the firm’s consistent quarterly profitability is a positive indicator, the modest long-term ROE and subdued stock returns suggest that quality metrics remain under scrutiny.

Comparing the stock’s returns over various time frames with the Sensex reveals a mixed performance. Over a 10-year period, Real Touch Finance has delivered a cumulative return of 314.44%, surpassing the Sensex’s 228.77%. Similarly, a five-year return of 1022.05% significantly outpaces the Sensex’s 90.68%. These figures underscore the company’s capacity for long-term value creation, despite recent headwinds.

Technical Indicators: Transition from Bearish to Mildly Bearish Trends

The recent revision in market assessment is largely influenced by changes in technical indicators. The stock’s technical trend has shifted from a bearish stance to a mildly bearish one, reflecting a subtle improvement in price momentum. Key technical metrics present a mixed picture:

• MACD readings show bearish signals on a weekly basis, while monthly data suggest a mildly bearish trend.


• Relative Strength Index (RSI) does not currently indicate a clear signal on either weekly or monthly charts.


• Bollinger Bands reflect sideways movement weekly, with mildly bearish tendencies monthly.


• Moving averages on a daily scale indicate a mildly bearish outlook.


• Other momentum indicators such as the KST and Dow Theory show bearish to mildly bearish trends across weekly and monthly timeframes.


• On-balance volume (OBV) suggests mildly bearish sentiment weekly, with no clear trend monthly.

These technical signals coincide with the stock’s recent price movement, where the current price stands at ₹51.39, up from the previous close of ₹48.95. The stock’s 52-week range spans from ₹29.84 to ₹87.46, indicating significant volatility over the past year.

Comparative Performance: Stock Versus Market Benchmarks

Examining Real Touch Finance’s returns relative to the Sensex over various periods highlights the stock’s uneven performance. The stock outperformed the Sensex over shorter intervals, with a one-week return of 15.74% compared to the Sensex’s -0.59%, and a one-month return of 2.68% versus the Sensex’s 1.34%. However, the year-to-date and one-year returns tell a different story, with the stock posting -37.71% and -29.89% respectively, while the Sensex recorded positive returns of 8.92% and 5.27% over the same periods.

Longer-term returns provide a more favourable context for Real Touch Finance. Over three years, the stock has returned 47.04%, exceeding the Sensex’s 35.37%. The five-year and ten-year returns are particularly notable, with the stock delivering 1022.05% and 314.44% respectively, compared to the Sensex’s 90.68% and 228.77%. These figures suggest that while recent performance has been challenging, the company has demonstrated significant growth potential over extended periods.

Outlook and Considerations for Investors

The recent revision in Real Touch Finance’s evaluation metrics reflects a complex interplay of factors. The company’s positive quarterly financial results and fair valuation metrics provide some support for its market position. However, the subdued long-term fundamental strength, as indicated by modest ROE and underwhelming recent stock returns, tempers enthusiasm.

Technical indicators suggest a cautious improvement in price momentum, moving from bearish to mildly bearish trends. This shift may signal a stabilisation phase, but the absence of strong bullish signals advises prudence.

Investors considering Real Touch Finance should weigh the company’s demonstrated ability to generate long-term returns against its recent challenges and sector-specific risks. The stock’s volatility and mixed signals underscore the importance of a balanced approach, incorporating both fundamental and technical analyses.

Limited Time Only! Upgrade now and get 1 Year of Stock of the week worth Rs. 14,999 for FREE. Don't miss out on this exclusive offer. Claim Your Free Year →