Aplab Ltd Upgraded to Hold by MarketsMOJO Amid Improving Technicals and Financial Trends

Technical Trends Signal Renewed Momentum

The primary catalyst for the upgrade stems from a marked improvement in Aplab’s technical grade, which shifted from mildly bullish to bullish. Key technical indicators underpinning this shift include a bullish stance in Bollinger Bands on both weekly and monthly charts, alongside daily moving averages signalling upward momentum. While the weekly MACD remains mildly bearish, the monthly MACD is bullish, suggesting longer-term positive momentum is gaining traction.

Other technical metrics present a mixed but improving picture. The KST indicator is mildly bearish on a weekly basis but bullish monthly, and the Dow Theory reflects a mildly bullish weekly trend with no clear monthly trend. The Relative Strength Index (RSI) remains neutral on both weekly and monthly timeframes, indicating no immediate overbought or oversold conditions. Overall, these technical signals suggest that the stock is gaining strength, supporting the upgrade in rating.

On 12 February 2026, Aplab’s share price closed at ₹80.85, up 5.45% from the previous close of ₹76.67. The stock traded within a range of ₹77.00 to ₹81.44 during the day, moving closer to its 52-week high of ₹93.00, a significant recovery from its 52-week low of ₹37.71.

Financial Trend Shows Positive Quarterly Performance

Aplab has demonstrated encouraging financial results over recent quarters, which have contributed to the revised rating. The company reported positive results for four consecutive quarters, with the latest nine-month PAT reaching ₹3.24 crores. This consistent profitability marks a turnaround from previous periods of volatility and underperformance.

Additionally, the company’s debtors turnover ratio for the half-year stands at a robust 2.93 times, indicating improved efficiency in receivables management. However, despite these positive signs, the company’s long-term fundamental strength remains weak, with a negative compound annual growth rate (CAGR) of -15.70% in operating profits over the past five years. This suggests that while recent quarters have been favourable, underlying operational challenges persist.

Moreover, Aplab’s ability to service debt remains constrained, with a high Debt to EBITDA ratio of 15.42 times, signalling elevated leverage risk. The company’s return on capital employed (ROCE) is negative at -11.6%, reflecting inefficiencies in generating returns from its capital base.

Valuation Remains Expensive Despite Market-Beating Returns

From a valuation perspective, Aplab is considered expensive relative to its peers. The enterprise value to capital employed ratio stands at 2.9, indicating a premium valuation. This is despite the company’s negative ROCE and weak long-term fundamentals. The stock’s price-to-earnings growth (PEG) ratio is effectively zero, reflecting the recent surge in profits—up 281.6% over the past year—without a corresponding increase in price multiples.

Investors have rewarded the stock with strong returns, as Aplab has generated a 34.08% return over the last 12 months, significantly outperforming the BSE500 index’s 13.00% return in the same period. Over longer horizons, the stock’s performance remains impressive, with a 5-year return of 285.92% compared to the Sensex’s 63.46%, and a 3-year return of 282.27% versus the Sensex’s 38.81%. However, the 10-year return of 228.66% trails the Sensex’s 267.00%, indicating some recent acceleration in performance.

Quality Assessment and Shareholding Pattern

Aplab’s quality rating remains moderate, reflected in its Mojo Score of 50.0 and a Mojo Grade upgrade from Sell to Hold. The company’s market capitalisation grade is 4, indicating a micro-cap status within the Other Electrical Equipment sector. Majority shareholding is held by non-institutional investors, which may impact liquidity and volatility.

While the company’s recent financial and technical improvements justify the upgrade, the Hold rating reflects caution due to the weak long-term fundamentals and high leverage. Investors are advised to monitor the company’s ability to sustain profitability and improve capital efficiency before considering a more bullish stance.

Outlook and Investor Considerations

In summary, Aplab Ltd’s upgrade to Hold reflects a nuanced balance of factors. The technical indicators have improved significantly, signalling a bullish trend that has been rewarded by the market with a 5.45% gain on the day of the upgrade announcement. Financially, the company’s recent quarters show consistent profitability and operational improvements, though long-term growth and debt servicing remain concerns.

Valuation metrics suggest the stock is trading at a premium, which may limit upside potential unless the company can demonstrate sustained earnings growth and capital efficiency improvements. Investors should weigh the company’s strong recent returns and technical momentum against its fundamental challenges and elevated leverage.

Given these considerations, the Hold rating is appropriate for investors seeking exposure to a recovering micro-cap in the Other Electrical Equipment sector, while those with a higher risk appetite may await further confirmation of financial stability before increasing their positions.

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