SMC Global Securities Downgraded to 'Sell' Despite Strong Fundamentals and Market Performance

SMC Global Securities, a smallcap company in the finance/NBFC industry, has recently been downgraded to a 'Sell' by MarketsMOJO on 06-Aug-24. This downgrade is due to the stock being in a Mildly Bearish range and the technical trend deteriorating from Mildly Bullish on the same date. Another key technical factor, the Bollinger Band, has also been Bearish since 06 Aug 2024.
Despite being a smallcap company, SMC Global Securities has a strong long-term fundamental strength with a 27.25% CAGR growth in Operating Profits. This is reflected in its healthy long-term growth as Operating profit has grown by an annual rate of 27.25%. Additionally, the company has declared positive results for the last 4 consecutive quarters, with PAT(HY) at Rs 119.02 cr growing at 130.39% and NET SALES(HY) at Rs 957.66 cr growing at 55.67%.

However, one concerning factor is that domestic mutual funds hold only 0% of the company. This may signify that they are not comfortable with the price or the business, despite having the capability to do in-depth on-the-ground research on companies.

With a ROE of 17.1, SMC Global Securities has an attractive valuation with a 1.4 Price to Book Value. However, the stock is currently trading at a premium compared to its average historical valuations. Over the past year, while the stock has generated a return of 95.35%, its profits have risen by 85.9%. The PEG ratio of the company is also low at 0.1, indicating a market-beating performance.

In conclusion, while SMC Global Securities has shown strong long-term fundamental strength and market-beating performance, the recent downgrade by MarketsMOJO and low interest from domestic mutual funds may be a cause for concern. Investors are advised to do their own research and make an informed decision before investing in this stock.