Jhaveri Credits & Capital downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and decreasing promoter confidence

Jhaveri Credits & Capital, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on April 8, 2024. This decision was based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 2.91%. Additionally, the stock is currently trading at a premium compared to its historical valuations, with a Price to Book Value of 34.1.
One of the main reasons for the downgrade is the decreasing confidence of the promoters in the company. In the previous quarter, they have reduced their stake by -20.95% and currently hold only 53.3% of the company. This could be a sign of reduced confidence in the future of the business.

However, there have been some positive developments for Jhaveri Credits & Capital, such as the highest PBDIT(Q) of Rs 1.37 crore, PBT LESS OI(Q) of Rs 1.36 crore, and PAT(Q) of Rs 1.06 crore in December 2023. The stock is also technically in a Mildly Bullish range, with multiple factors like MACD, KST, and OBV indicating a bullish trend.

Moreover, the company has consistently generated strong returns over the last 3 years, outperforming BSE 500 in each of the last 3 annual periods. However, it is important to note that the stock has generated a return of 551.91% in the last year, while its profits have only increased by 233%. This results in a PEG ratio of 0, which could be a cause for concern.

In conclusion, while Jhaveri Credits & Capital has shown positive results and technical indicators, the downgrade to 'Sell' by MarketsMOJO highlights some concerns about the company's long-term fundamental strength and promoter confidence. Investors should carefully consider these factors before making any investment decisions.