MarketsMOJO downgrades Gilada Finance & Investments to 'Sell' due to weak fundamentals and underperformance

Gilada Finance & Investments, a microcap finance and non-banking financial company (NBFC), has recently been downgraded to a 'Sell' by MarketsMOJO on February 12, 2024.
The downgrade is based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 6.08%. Additionally, the company has shown poor long-term growth, with net sales growing at an annual rate of 10.94% and operating profit at 2.62%. In fact, the company's EPS(Q) was at its lowest at Rs 0.43 in December 2023.

Not only has the company underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, but it has also generated -5.68% returns in the last 1 year. This indicates a below-par performance in both the long-term and near-term.

On the technical side, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and OBV showing bullish signals. However, the stock is trading at a premium compared to its average historical valuations, with a Price to Book Value of 1.

Despite the company's attractive ROE of 9.3, its PEG ratio of 0.4 suggests that the stock may be overvalued. In the past year, while the stock has generated a return of -5.68%, its profits have risen by 21.2%.

It is worth noting that the majority shareholders of Gilada Finance & Investments are the promoters themselves. This may raise concerns about potential conflicts of interest and could be a factor in the company's underperformance.

In conclusion, based on the current data and analysis, it may be wise to exercise caution when considering investing in Gilada Finance & Investments. The company's weak long-term fundamentals and below-par performance in the near-term suggest that it may not be a wise investment option at this time.