Atul Ltd. Upgraded to Hold by MarketsMOJO on Improved Technicals and Financials

Technical Trends Signal Mild Optimism

The primary catalyst for the upgrade stems from a positive change in Atul Ltd.’s technical grade, which moved from a sideways trend to a mildly bullish stance. Weekly technical indicators such as the Moving Average Convergence Divergence (MACD) have turned mildly bullish, signalling potential upward momentum in the near term. Meanwhile, the monthly MACD remains bearish, suggesting some caution for longer-term investors.

Relative Strength Index (RSI) readings present a mixed picture: weekly RSI shows no clear signal, but the monthly RSI is bullish, indicating strengthening momentum over a longer horizon. Bollinger Bands on a weekly basis are bullish, reflecting increased price volatility with an upward bias, while monthly bands remain sideways, implying consolidation.

Other technical tools such as the Know Sure Thing (KST) indicator are bullish on a weekly scale but bearish monthly, and Dow Theory assessments show no clear weekly trend but a mildly bullish monthly outlook. On-Balance Volume (OBV), a volume-based indicator, is bullish on both weekly and monthly charts, suggesting accumulation by investors.

Despite these positive signals, daily moving averages remain mildly bearish, indicating some short-term resistance. Overall, the technical landscape supports a cautious but optimistic stance, justifying the upgrade to Hold.

Financial Performance: Strong Quarterly Results but Mixed Long-Term Growth

Atul Ltd.’s financial trend has improved notably, particularly in the third quarter of fiscal year 2025-26. The company reported net sales of ₹1,573.62 crores, marking the highest quarterly sales figure to date. Profit After Tax (PAT) for the nine months ended December 2025 stood at ₹467.75 crores, reflecting a robust growth rate of 30.86% year-on-year. Return on Capital Employed (ROCE) for the half-year reached a peak of 12.64%, underscoring efficient capital utilisation.

Institutional investors hold a significant 32.86% stake in Atul Ltd., signalling confidence from well-resourced market participants who typically conduct thorough fundamental analysis. The company’s average Debt to Equity ratio remains at a conservative zero, highlighting a strong balance sheet with minimal leverage risk.

However, the long-term financial trend presents some concerns. Operating profit has declined at an annualised rate of 2.00% over the past five years, indicating challenges in sustaining growth momentum. Return on Equity (ROE) stands at 9.2%, which, while positive, is modest compared to sector leaders.

Valuation: Expensive Yet Discounted Relative to Peers

Atul Ltd. currently trades at a Price to Book (P/B) ratio of 3.3, which is considered expensive in absolute terms. This elevated valuation reflects investor expectations of continued earnings growth and the company’s strong market position. However, when compared to its peers in the Specialty Chemicals sector, Atul’s valuation is at a discount relative to their historical averages, suggesting some value remains for discerning investors.

The stock’s Price/Earnings to Growth (PEG) ratio is 0.8, indicating that earnings growth is outpacing the price increase, a positive sign for valuation discipline. Over the past year, Atul Ltd. has delivered a total return of 14.93%, outperforming the Sensex’s 10.41% return in the same period. Profit growth over the year has been even more impressive at 42.9%, reinforcing the company’s earnings momentum.

Despite these positives, investors should weigh the premium valuation against the company’s slower long-term operating profit growth and moderate ROE.

Quality Assessment: Solid Fundamentals with Room for Improvement

Atul Ltd.’s quality grade remains steady, supported by its strong balance sheet, low leverage, and consistent profitability. The company’s market capitalisation grade is rated 3, reflecting a mid-cap status with moderate liquidity and market presence. The Mojo Score of 58.0 places Atul in the Hold category, upgraded from a previous Sell rating, signalling a more balanced risk-reward profile.

The company’s stock price closed at ₹6,680.75 on 12 February 2026, up 0.91% from the previous close of ₹6,620.75. The 52-week price range spans from ₹4,882.00 to ₹7,793.00, indicating significant price appreciation over the past year. Daily trading ranges on the upgrade day showed a high of ₹6,724.85 and a low of ₹6,546.40, reflecting moderate volatility.

Long-term returns tell a mixed story: while Atul Ltd. has delivered an extraordinary 374.37% return over ten years, outperforming the Sensex’s 267.00%, its three-year return of -6.81% lags behind the Sensex’s 38.81%, highlighting cyclical challenges in recent years.

Investment Outlook and Conclusion

The upgrade of Atul Ltd.’s investment rating to Hold reflects a more balanced view of the company’s prospects. Technical indicators suggest emerging bullish momentum, while recent financial results demonstrate strong quarterly growth and operational efficiency. Valuation remains on the higher side but is justified by earnings growth and relative discount to peers’ historical multiples.

Investors should remain mindful of the company’s slower long-term operating profit growth and moderate ROE, which temper enthusiasm. The substantial institutional ownership provides a degree of confidence in the company’s fundamentals and governance.

Overall, Atul Ltd. presents a compelling case for cautious accumulation, with the Hold rating signalling that while the stock is no longer a sell, it may not yet warrant a Buy recommendation until further clarity emerges on sustained growth and technical confirmation.

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