Standard Capital Markets Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals

Standard Capital Markets, a microcap finance company, has recently received a 'Sell' rating from MarketsMOJO on May 2, 2024. This downgrade is due to the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of only 1.39%. In comparison, the market (BSE 500) has generated returns of 36.71% in the last year, while the stock has underperformed with negative returns of -28.08%.
Despite declaring positive results for the last three consecutive quarters, the company's growth in Operating Profit of 53.5% is not enough to outweigh its weak ROE. The company's net sales for the last 9 months have grown significantly at 235.34%, with a higher PAT of Rs 8.28 crore. However, the technical trend for the stock is currently sideways, indicating no clear price momentum.

Furthermore, with an ROE of 6.4, the stock is currently fairly valued with a price to book value of 1.8. It is also trading at a discount compared to its average historical valuations. However, despite a 920% increase in profits over the past year, the stock has still generated negative returns, resulting in a PEG ratio of 0.9.

It is worth noting that the majority of shareholders in Standard Capital Markets are non-institutional investors. This could potentially lead to higher volatility in the stock price. Overall, with its weak fundamental strength and underperformance in the market, it is advisable to approach this stock with caution.