Smart Finsec Receives 'Sell' Rating from MarketsMOJO, Despite Recent Positive Results and Promoter Confidence

Smart Finsec, a microcap finance company, has recently received a 'Sell' rating from MarketsMOJO on February 1, 2024. This downgrade is due to weak long-term fundamental strength, with an average Return on Equity (ROE) of 11.63%. The company's valuation is also considered expensive, with a price to book value of 3.9, trading at a premium compared to its historical valuations.
Despite a 100.64% return in the past year, the company's profits have only risen by 96.7%, resulting in a low PEG ratio of 0.2. However, there are some positive factors to consider, such as the company's recent positive results in September 2023 after three consecutive negative quarters. The company's PBDIT(Q), PBT LESS OI(Q), and PAT(Q) have all shown significant improvement, with the highest values at Rs 2.08 cr, Rs 2.07 cr, and Rs 1.59 cr, respectively.

From a technical standpoint, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. Additionally, there has been a rise in promoter confidence, with promoters increasing their stake in the company by 2.86% in the previous quarter and currently holding 74.99% of the company. This increase in stake is a positive sign of high confidence in the future of the business.

In terms of performance, Smart Finsec has not only beaten the market in the near term but has also outperformed the BSE 500 in the last 3 years, 1 year, and 3 months. However, considering the recent downgrade and the company's expensive valuation, investors may want to approach this stock with caution.