Silver Touch Technologies Downgraded to 'Sell' by MarketsMOJO on November 19, 2024

Silver Touch Technologies, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 19, 2024. This decision was based on several factors, including poor management efficiency with a low return on equity (ROE) of 7.82%. This indicates a low profitability per unit of shareholders' funds.
In addition, the company has shown poor long-term growth with net sales growing at an annual rate of 31.75% and operating profit at -0.25% over the last 5 years. The stock is also currently in a mildly bearish range, with technical trends deteriorating from sideways on November 19, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, contribute to the bearish outlook for the stock.

Another concerning factor is that despite its size, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the stock's price or the business itself. Furthermore, Silver Touch Technologies has underperformed the market in the last year, with a return of only 7.20% compared to the market's (BSE 500) return of 24.46%.

However, there are some positive aspects to consider. The company has a low debt to equity ratio and has declared positive results for the last 9 consecutive quarters. In the last half-year, the company's profits have grown by 51.97%, and net sales have grown by 44.64%. Additionally, the company has a high debtors turnover ratio of 3.27 times, indicating efficient management of its accounts receivable.

With a ROCE of 20.5, Silver Touch Technologies has a fair valuation and a 6.6 enterprise value to capital employed. The stock is currently trading at a discount compared to its average historical valuations. While the stock has only generated a return of 7.20% in the last year, its profits have risen by 65%, resulting in a PEG ratio of 0.7.

In conclusion, while Silver Touch Technologies may have some positive aspects, the overall outlook for the stock is bearish. Investors should carefully consider these factors before making any investment decisions.