MarketsMOJO downgrades Jhaveri Credits & Capital to 'Sell' due to weak fundamentals and overvaluation

Jhaveri Credits & Capital, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision is based on the weak long-term fundamental strength of the company, 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 31.
The stock has seen a significant increase in returns over the past year, with a 514.85% return. However, this increase in profits (233%) has not been reflected in the PEG ratio of the company, which is currently at 0. This suggests that the stock may be overvalued.

In addition, there has been a decrease in promoter confidence, with promoters reducing their stake in the company by -20.95% over the previous quarter. This could indicate a lack of confidence in the future of the business.

On a positive note, the company has shown strong results in December 2023, with the highest PBDIT(Q) at Rs 1.37 crore, PBT LESS OI(Q) at Rs 1.36 crore, and PAT(Q) at Rs 1.06 crore. The stock is also technically in a Mildly Bullish range, with multiple factors such as RSI, MACD, KST, DOW, and OBV indicating a bullish trend.

Moreover, Jhaveri Credits & Capital has consistently outperformed the BSE 500 index over the last 3 years, further highlighting its potential for growth. However, considering the current valuation and decrease in promoter confidence, MarketsMOJO has downgraded the stock to a 'Sell'. Investors are advised to carefully evaluate their investment decisions before investing in this microcap finance company.