Anupam Rasayan India Ltd Downgraded to Hold Amid Mixed Technical and Valuation Signals

Quality Assessment: Sustained Operational Strength Amid Institutional Caution

Anupam Rasayan continues to demonstrate solid operational quality, underscored by its recent quarterly results. The company reported net sales of ₹731.40 crores in Q2 FY25-26, marking a significant 50.55% year-on-year increase. Profit after tax (PAT) for the quarter stood at ₹44.39 crores, reflecting a 43.8% growth compared to the previous four-quarter average. These figures highlight consistent earnings momentum, with positive results declared for three consecutive quarters.

Return on Capital Employed (ROCE) remains respectable at 10.2%, indicating efficient utilisation of capital resources. However, institutional investor participation has declined, with a 0.97% reduction in stake over the previous quarter, leaving institutional holdings at 8.03%. This drop signals a degree of caution among sophisticated investors, who typically possess superior analytical capabilities. While the company’s fundamentals remain strong, this shift in ownership dynamics warrants attention.

Valuation: Expensive Yet Discounted Relative to Peers

Valuation metrics present a mixed picture. Anupam Rasayan trades at an enterprise value to capital employed ratio of 3.7, which is considered expensive in absolute terms. Nonetheless, when benchmarked against its peers in the Specialty Chemicals sector, the stock is trading at a discount to their historical averages. This relative valuation suggests some room for upside, but the premium valuation on an absolute basis tempers enthusiasm.

Further supporting the valuation narrative is the company’s PEG ratio of 0.8, derived from a 116.3% increase in profits over the past year against a 75.29% stock return. A PEG below 1 typically indicates undervaluation relative to earnings growth, signalling potential value for long-term investors. However, the current price level near ₹1,215.65, down from a 52-week high of ₹1,374.20, reflects market hesitancy amid broader sector volatility.

Financial Trend: Strong Growth but Near-Term Pressure Evident

Financially, Anupam Rasayan has delivered market-beating returns over multiple time horizons. The stock has generated a remarkable 75.29% return over the last year, significantly outperforming the Sensex’s 8.01% gain during the same period. Over three years, the stock’s return of 88.44% dwarfs the Sensex’s 35.12%, underscoring the company’s strong growth trajectory.

However, recent price action reveals some near-term weakness. The stock has declined 7.95% in the past week and 8.9% over the last month, underperforming the Sensex’s respective declines of 1.77% and 3.56%. Year-to-date, the stock is down 7.9%, compared to the Sensex’s 3.89% fall. This short-term underperformance suggests profit-taking or sector rotation pressures, despite the company’s solid quarterly earnings.

Technical Analysis: Shift from Bullish to Mildly Bullish Signals

The downgrade to Hold is primarily driven by a reassessment of technical indicators, which have shifted from a bullish to a mildly bullish stance. Key technical metrics present a mixed outlook:

• MACD: Remains bullish on both weekly and monthly charts, signalling underlying momentum.


• RSI: Weekly RSI shows no clear signal, while monthly RSI has turned bearish, indicating potential weakening momentum over the longer term.


• Bollinger Bands: Mildly bullish on both weekly and monthly timeframes, suggesting moderate upward price pressure but with limited conviction.


• Moving Averages: Daily moving averages are mildly bullish, reflecting short-term support but not strong upward momentum.


• KST (Know Sure Thing): Bullish on weekly and monthly charts, supporting a positive trend.


• Dow Theory: Weekly readings are mildly bearish, contrasting with a bullish monthly outlook, highlighting conflicting signals.


• On-Balance Volume (OBV): Weekly OBV is mildly bearish, indicating declining volume participation in price advances, while monthly OBV shows no clear trend.

These mixed technical signals, combined with recent price declines and reduced institutional interest, have prompted a more cautious technical grade and contributed significantly to the overall downgrade.

Market Capitalisation and Sector Context

Anupam Rasayan’s market capitalisation grade stands at 3, reflecting its mid-cap status within the Specialty Chemicals sector. The sector itself has experienced volatility amid global supply chain disruptions and fluctuating raw material costs. Despite these headwinds, Anupam Rasayan’s strong operational performance and market-beating returns position it favourably relative to peers, though valuation and technical caution remain pertinent.

Conclusion: Hold Rating Reflects Balanced View Amid Contrasting Signals

The downgrade of Anupam Rasayan India Ltd’s investment rating from Buy to Hold encapsulates a balanced appraisal of its current standing. The company’s quality remains robust, supported by strong quarterly earnings growth and solid returns on capital. Valuation metrics, while expensive on an absolute basis, offer relative discounts to peers and a favourable PEG ratio, signalling potential value.

Nonetheless, the recent decline in institutional investor participation, combined with mixed technical indicators and short-term price underperformance, introduces caution. The shift in technical trend from bullish to mildly bullish, particularly the bearish monthly RSI and weekly OBV signals, suggests that momentum may be waning.

Investors should weigh these factors carefully, recognising the company’s strong fundamentals and long-term growth prospects while remaining mindful of near-term volatility and valuation risks. The Hold rating advises a wait-and-watch approach, favouring existing shareholders maintaining positions but recommending new investors exercise prudence.

Unlock special upgrade rates for a limited period. Start Saving Now →