Silver Touch Technologies Receives 'Buy' Rating from MarketsMOJO Based on Strong Financial Performance and Positive Outlook

Silver Touch Technologies, a microcap IT software company, has recently received a 'Buy' rating from MarketsMOJO on April 9, 2024. This upgrade is based on the company's strong financial performance and positive outlook.
One of the key factors contributing to the 'Buy' rating is the company's low Debt to Equity ratio, which is currently at 0 times. This indicates a healthy financial position and lower risk for investors. Additionally, Silver Touch Technologies has shown a remarkable growth in Net Profit of 128.11% and has declared positive results for the last 6 consecutive quarters. In fact, its NET SALES(Q) and PBDIT(Q) have reached their highest levels at Rs 53.62 cr and Rs 7.72 cr respectively.

From a technical standpoint, the stock is currently in a Bullish range and has shown improvement in its technical trend from Mildly Bullish on April 9, 2024. The Bollinger Band and OBV technical factors also suggest a Bullish trend for the stock.

In terms of market performance, Silver Touch Technologies has outperformed the market (BSE 500) with a return of 86.58% in the last 1 year, compared to the market's return of 39.93%.

However, there are some risks associated with investing in Silver Touch Technologies. The company has a low Return on Equity (ROE) of 7.82%, indicating poor management efficiency and profitability per unit of shareholders' funds. Its long-term growth has also been poor, with Net Sales and Operating profit growing at an annual rate of -1.10% and -0.25% respectively over the last 5 years.

Moreover, with a ROCE of 14.2, the company's valuation is considered Very Expensive with a 7.8 Enterprise value to Capital Employed. This is higher than its average historical valuations. Additionally, the PEG ratio of the company is 1.4, indicating a relatively high price for its growth prospects.

It is also worth noting that despite its size, domestic mutual funds hold only 0% of the company, which could suggest that they are not comfortable with the current price or the business. As domestic mutual funds have the capability to conduct in-depth research, this could be a red flag for potential investors.

In conclusion, while Silver Touch Technologies has shown strong financial performance and a positive outlook, investors should carefully consider the risks associated with the stock before making any investment decisions.