Bengal & Assam Company Downgraded to 'Sell' by MarketsMOJO After Negative Financial Results

Bengal & Assam Company, a midcap finance company, has recently been downgraded to 'Sell' by MarketsMOJO. This decision was based on the company's negative financial results in March 2024, after 7 consecutive quarters of positive results. The company's cash and cash equivalents were at their lowest at Rs 32.60 crore, while its net sales and PBDIT were also at their lowest at Rs 522.94 crore and Rs 110.21 crore, respectively.
One of the main reasons for the downgrade is the company's expensive valuation, with a price to book value of 1.1 and a ROE of 14.4. This is considered to be a fair value compared to its historical valuations. Additionally, while the stock has generated a return of 71.22% in the past year, its profits have only risen by 31.9%, resulting in a PEG ratio of 0.2.

Another concerning factor is the low stake held by domestic mutual funds in the company, at only 0.01%. This could indicate that they are not comfortable with the current price or the business itself, as they have the capability to conduct in-depth research on companies.

However, there are some positive aspects to consider. The company has a strong long-term fundamental strength, with an average ROE of 15.28%. The stock is also currently in a mildly bullish range, with multiple technical factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

In terms of returns, Bengal & Assam Company has consistently outperformed the BSE 500 index over the last 3 years, with a return of 71.22% in the past year alone. While the recent downgrade may be a cause for concern, it is important to consider all factors before making any investment decisions.