Purshottam Investofin Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Concerns for Investors

Purshottam Investofin, a microcap finance company, has recently been downgraded to a 'Sell' by MarketsMOJO on August 27, 2024. This decision was based on the weak long-term fundamental strength of the company, with an average Return on Equity (ROE) of 3.35% and poor long-term growth in Net Sales, which has only grown at an annual rate of 30.38%.
Despite declaring positive results for the last four consecutive quarters, with a significant growth in PAT (HY) at Rs 3.82 crore (a growth of 932.43%) and the highest NET SALES (Q) at Rs 26.96 crore, there are other factors that have contributed to the 'Sell' rating. The stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

At a ROE of 26.5, the stock is fairly valued with a price to book value of 0.7. However, it is currently trading at a discount compared to its average historical valuations. Despite generating a return of 258.81% in the past year, the company's profits have only risen by 1002%, indicating a potential concern for investors.

The majority shareholders of Purshottam Investofin are non-institutional investors. However, the company has shown market-beating performance in both the long-term and near-term, outperforming the BSE 500 index in the last three years, one year, and three months. While the stock may have generated high returns in the past year, the downgrade by MarketsMOJO suggests caution for potential investors.