Tamilnad Mercantile Bank Downgraded to 'Sell' by MarketsMOJO on Flat Results

Tamilnad Mercantile Bank, a midcap private bank, has recently been downgraded to a 'Sell' by MarketsMOJO on July 15, 2024. This downgrade is based on the company's flat results in the March 2024 quarter, with its operating profit to net sales ratio at a low of 16.16% and PBDIT at Rs 202.65 crore. Additionally, the company's PAT has fallen by -5.6% to Rs 253.06 crore.
Technically, the stock is currently in a mildly bearish range and has generated -1.87% returns since July 9, 2024. The key technical factor, Bollinger Band, has also been mildly bearish since July 9, 2024.

Despite being a midcap company, domestic mutual funds hold only 0.15% of the company, indicating that they may not be comfortable with the current price or the business.

In the last year, the stock has underperformed the market with a return of only 11.99%, compared to the market's return of 37.76% (BSE 500).

However, there are some positive factors to consider. The bank has a high Capital Adequacy Ratio of 22.53%, indicating strong buffers against its risk-based assets. It also has a healthy long-term growth rate, with its net profit growing at an annual rate of 33.80%.

In terms of valuation, the stock is currently trading at a very attractive price to book value of 0.9, compared to its average historical valuations. However, its profits have only risen by 4% in the past year, resulting in a PEG ratio of 1.7.

Overall, while Tamilnad Mercantile Bank may have some positive aspects, the recent downgrade by MarketsMOJO and its underperformance in the market may be cause for concern for potential investors. It is important to carefully consider all factors before making any investment decisions.