Allcargo Logistics Downgraded to Strong Sell Amid Weak Financials and Bearish Technicals

Quality Assessment: Declining Operational and Financial Health

Allcargo Logistics Ltd’s quality metrics have weakened considerably over recent years. The company’s net sales have contracted at an annualised rate of -9.43% over the past five years, signalling persistent top-line challenges. Operating profit has plunged by -45.39% during the same period, underscoring margin pressures and operational inefficiencies. The latest quarterly results for Q3 FY25-26 reveal a continuation of this negative trend, with net sales for the quarter falling sharply by 62.5% compared to the previous four-quarter average, landing at ₹516 crores.

Profit after tax (PAT) for the nine months ended December 2025 stands at a modest ₹6 crores, reflecting a steep decline of -61.90%. This sustained underperformance has eroded investor confidence, as evidenced by the promoters reducing their stake by -22.79% in the last quarter, now holding 40.49% of the company. Such a significant divestment by promoters often signals diminished faith in the company’s near-term prospects.

Despite these challenges, the company maintains a relatively low average debt-to-equity ratio of 0.46 times, which could be viewed as a positive from a balance sheet perspective. However, the return on capital employed (ROCE) remains subdued at 1.4%, indicating that capital utilisation is not generating adequate returns.

Valuation: Attractive on Paper but Reflective of Underlying Risks

From a valuation standpoint, Allcargo Logistics Ltd appears attractively priced relative to its peers. The enterprise value to capital employed ratio stands at 1.3, suggesting the stock trades at a discount compared to historical averages within the transport services sector. The current market price of ₹8.97 is close to its 52-week low of ₹8.92, a stark contrast to the 52-week high of ₹38.37, highlighting the steep decline in investor sentiment.

However, this apparent valuation bargain is tempered by the company’s poor financial trajectory and weak operational metrics. The stock’s long-term returns have been dismal, with a 1-year return of -73.78% and a 3-year return of -86.49%, significantly underperforming the Sensex, which has delivered 9.66% and 35.81% respectively over the same periods. Such underperformance suggests that the low valuation is a reflection of fundamental concerns rather than a hidden value opportunity.

Financial Trend: Persistent Weakness and Negative Growth

The financial trend for Allcargo Logistics Ltd remains firmly negative. The company has reported losses or negative growth for three consecutive quarters, with the latest nine-month PAT declining by nearly 62%. Net sales have also fallen drastically, indicating a sharp contraction in business volumes or pricing power. Cash and cash equivalents have dwindled to ₹138 crores at half-year, the lowest level recorded, raising concerns about liquidity and operational flexibility.

Comparing the stock’s returns with the broader market benchmark BSE Sensex reveals a stark contrast. While the Sensex has delivered positive returns of 9.66% over the past year and 59.83% over five years, Allcargo Logistics has generated negative returns of -73.78% and -64.53% respectively. This consistent underperformance highlights the company’s inability to keep pace with market growth and sectoral peers.

Despite the negative financial trend, it is noteworthy that the company’s profits have risen by 39% over the past year, a rare bright spot amid the broader decline. However, this improvement has not translated into positive stock performance or investor confidence.

Technical Analysis: Shift to Bearish Momentum

The downgrade to Strong Sell was significantly influenced by a deterioration in technical indicators. The technical grade shifted from mildly bearish to outright bearish, reflecting increased selling pressure and weakening momentum. Key technical signals include:

• MACD on a weekly basis remains mildly bullish, but the monthly MACD is bearish, indicating longer-term downward momentum.
• Relative Strength Index (RSI) shows no clear signal weekly but is bullish monthly, suggesting some short-term oversold conditions.
• Bollinger Bands are bearish on both weekly and monthly charts, signalling increased volatility and downward price pressure.
• Daily moving averages are bearish, confirming the short-term downtrend.
• KST (Know Sure Thing) indicator is bearish on both weekly and monthly timeframes, reinforcing the negative momentum.
• Dow Theory analysis shows mildly bearish trends on weekly and monthly charts.
• On-Balance Volume (OBV) lacks a clear trend weekly and is mildly bearish monthly, indicating weak buying interest.

The stock price closed at ₹8.97 on 17 Feb 2026, down 3.65% from the previous close of ₹9.31, hovering near its 52-week low. The daily trading range between ₹8.92 and ₹9.35 further reflects the subdued investor sentiment and lack of buying conviction.

Summary of Ratings and Outlook

MarketsMOJO’s current Mojo Score for Allcargo Logistics Ltd stands at 28.0, with a Mojo Grade of Strong Sell, downgraded from Sell as of 16 Feb 2026. The market capitalisation grade remains at 4, reflecting the company’s mid-cap status but limited investor interest. The downgrade is primarily driven by the worsening technical outlook combined with sustained negative financial trends and declining operational quality.

Investors should note that despite the attractive valuation metrics, the company’s fundamental weaknesses and bearish technical signals suggest caution. The consistent underperformance relative to the Sensex and sector peers over multiple time horizons further emphasises the risks involved.

Given the promoter stake reduction, shrinking cash reserves, and deteriorating profitability, the outlook for Allcargo Logistics Ltd remains challenging in the near to medium term. Unless there is a significant turnaround in operational performance or a positive shift in market sentiment, the stock is likely to remain under pressure.

Conclusion

Allcargo Logistics Ltd’s downgrade to Strong Sell reflects a comprehensive reassessment of its quality, valuation, financial trend, and technical parameters. The company’s declining sales and profits, promoter stake reduction, and bearish technical indicators have combined to erode investor confidence. While valuation appears attractive, it is largely a reflection of the company’s struggles rather than an undervalued opportunity. Investors are advised to exercise caution and consider alternative investments with stronger fundamentals and technical momentum.

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