Dharani Finance downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and expensive valuation

Dharani Finance, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 9th, 2024. This decision was based on weak long-term fundamental strength, with an average Return on Equity (ROE) of 0.76% and poor long-term growth as Net Sales has grown by an annual rate of -0.96%. Additionally, the stock has an expensive valuation with a Price to Book Value of 0.5 and is currently trading at a discount compared to its average historical valuations.
Despite generating a return of 77.88% in the past year, the company's profits have only risen by 26%, resulting in a PEG ratio of 0. This indicates that the stock may be overvalued and not a good investment option.

On a positive note, Dharani Finance has shown strong results in the quarter ending June 2024, with its PBDIT(Q), PBT LESS OI(Q), and PAT(Q) reaching their highest levels at Rs 0.33 cr, Rs 0.31 cr, and Rs 0.31 cr respectively. The stock is also currently in a mildly bullish range, with its MACD and KST technical factors also showing bullish signals.

Majority shareholders of Dharani Finance are non-institutional investors, and the company has a track record of market-beating performance in the long term as well as the near term. In the last 3 years, 1 year, and 3 months, the stock has outperformed BSE 500, making it a potential investment option for those looking for long-term growth. However, considering the recent downgrade and weak fundamental strength, it is advised to do thorough research and consult a financial advisor before making any investment decisions.