Current Rating and Its Significance
MarketsMOJO currently assigns Sakthi Finance Ltd a 'Sell' rating, reflecting a cautious stance towards the stock. This rating indicates that, based on a detailed analysis of multiple parameters, the stock is expected to underperform relative to the broader market or its sector peers in the near to medium term. Investors should consider this recommendation as a signal to evaluate their exposure carefully and possibly reduce holdings, depending on their risk appetite and portfolio strategy.
Rating Update Context
The rating was revised to 'Sell' on 02 January 2026, moving up from a previous 'Strong Sell' grade. This change was accompanied by an improvement in the Mojo Score from 26 to 31 points, signalling a slight enhancement in the stock’s overall profile. Despite this upgrade, the current rating still advises caution, reflecting ongoing challenges in the company’s fundamentals and market performance.
Here’s How Sakthi Finance Ltd Looks Today
As of 04 January 2026, Sakthi Finance Ltd remains a microcap player within the Non Banking Financial Company (NBFC) sector. The latest data shows a mixed picture across key evaluation parameters, which collectively justify the 'Sell' rating.
Quality Assessment
The company’s quality grade is assessed as below average. This is primarily due to weak long-term fundamental strength, with an average Return on Equity (ROE) of just 6.25%. Such a modest ROE suggests limited profitability relative to shareholder equity, which is a concern for investors seeking robust earnings growth. Furthermore, the company’s net sales have grown at a sluggish annual rate of 4.69%, while operating profit has increased at a similarly low rate of 4.44%. These figures indicate that Sakthi Finance Ltd has struggled to generate meaningful growth over recent years.
Valuation Perspective
On the valuation front, the stock is currently graded as very attractive. This suggests that, despite its challenges, Sakthi Finance Ltd is trading at a price level that could offer value to investors who are willing to accept the associated risks. The valuation attractiveness may stem from the stock’s depressed price, reflecting the market’s cautious view of its prospects. However, value alone does not guarantee positive returns, especially if underlying fundamentals remain weak.
Financial Trend Analysis
The financial trend for Sakthi Finance Ltd is flat, indicating little to no improvement or deterioration in recent financial performance. The company reported flat results in the September 2025 half-year period, with a notably high debt-equity ratio of 5.45 times. Such a high leverage level raises concerns about financial risk and the company’s ability to manage its debt obligations effectively. Additionally, the Profit Before Tax excluding other income (PBT less OI) for the quarter was low at ₹5.46 crores, underscoring the limited profitability in the near term.
Technical Outlook
Technically, the stock is graded as mildly bearish. This reflects recent price action and momentum indicators that suggest a cautious or negative near-term trend. The stock’s returns over various periods reinforce this view: while it has gained 3.85% in the last day and nearly 10% over the past week and month, it has declined by 7.55% over three months, 18.33% over six months, and a significant 35.43% over the past year. These figures highlight volatility and a general downward trend over longer horizons, which investors should consider when timing entry or exit points.
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Stock Performance and Market Comparison
The latest data shows that Sakthi Finance Ltd has underperformed key benchmarks such as the BSE500 index over the last three years, one year, and three months. This underperformance is a critical factor in the current rating, signalling that the stock has not kept pace with broader market gains. The stock’s recent positive returns over one day, one week, and one month may reflect short-term trading interest or technical rebounds, but the longer-term negative returns highlight persistent challenges.
Investor Considerations
For investors, the 'Sell' rating implies that caution is warranted. The combination of below-average quality, high leverage, flat financial trends, and a mildly bearish technical outlook suggests that the stock may face continued headwinds. While the valuation appears attractive, this alone does not offset the risks associated with weak fundamentals and market underperformance. Investors should carefully assess their portfolio exposure and consider alternative opportunities within the NBFC sector or broader market that offer stronger growth and financial stability.
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Summary
In summary, Sakthi Finance Ltd’s current 'Sell' rating by MarketsMOJO reflects a comprehensive evaluation of its quality, valuation, financial trend, and technical outlook as of 04 January 2026. While the stock shows some valuation appeal, ongoing concerns about profitability, leverage, and market performance underpin the cautious recommendation. Investors should weigh these factors carefully and monitor developments closely before making investment decisions.
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