Starteck Finance Receives Upgraded Stock Call

Starteck Finance, a microcap finance company, has recently received an upgraded stock call from MarketsMOJO. The company's stock has been upgraded to 'Hold' on 2023-08-07, indicating a positive outlook for the company.
One of the main reasons for this upgrade is the outstanding financial results declared by Starteck Finance in September 2023. The company has shown a growth in net profit of 224.02%, with the highest operating cash flow of Rs 85.58 crore and net sales of Rs 12.33 crore. Additionally, the PBDIT (Profit Before Depreciation, Interest, and Taxes) has also reached its highest at Rs 11.34 crore.

Technically, the stock is in a bullish range and has shown a significant improvement since November 2023, generating a return of 31.33%. Multiple factors such as MACD, Bollinger Band, KST, DOW, and OBV have contributed to the bullish trend.

The majority shareholders of Starteck Finance are the promoters, indicating their confidence in the company's growth potential. The stock has consistently outperformed BSE 500 in the last three annual periods, with a return of 77.94% in the last year alone.

However, the company's long-term fundamental strength is weak, with an average Return on Equity (ROE) of 8.56%. The net sales and operating profit have only grown at an annual rate of 17.91% and 8.59%, respectively. This could be a cause for concern for investors.

Moreover, the stock is currently trading at an expensive valuation with a price to book value of 1.3. It is also trading at a premium compared to its historical valuations. Although the stock has generated a return of 77.94% in the last year, its profits have only increased by 71.5%, resulting in a PEG ratio of 0.2.

In conclusion, while Starteck Finance has shown strong financial performance and a bullish trend in the short term, its weak long-term fundamentals and expensive valuation may be a cause for caution for potential investors.