Borosil Scientific Ltd Rating Upgraded to Sell Amid Valuation Improvements

Valuation Shift: From Expensive to Fair

The most significant catalyst for the rating upgrade is the change in Borosil Scientific’s valuation grade. Previously classified as expensive, the company’s valuation has now been reassessed as fair. This shift is underpinned by key multiples that suggest the stock is more reasonably priced relative to its earnings and asset base. The price-to-earnings (PE) ratio stands at 54.02, which, while still elevated, compares favourably against peers such as Asahi India Glass and Borosil Renewables, which trade at PE ratios of 82.95 and 178.63 respectively.

Other valuation multiples reinforce this view: the enterprise value to EBITDA (EV/EBITDA) ratio is 22.33, and the price-to-book (P/B) value is 2.45. These figures indicate that the market is pricing Borosil Scientific at a more reasonable premium than before, especially when contrasted with competitors in the glass industry, many of which remain very expensive. This moderation in valuation has been a key factor in upgrading the investment rating, signalling that the stock may now offer better value for investors willing to consider its risks.

Financial Trend: Mixed Signals Amidst Weak Profitability

Despite the improved valuation, Borosil Scientific’s financial trend remains a concern. The company reported negative financial performance in the second quarter of FY25-26, with profit before tax (PBT) excluding other income falling sharply by 55.8% to ₹2.98 crores compared to the previous four-quarter average. The net profit after tax (PAT) for the nine months ended December 2025 declined by 39.4% to ₹14.01 crores.

Non-operating income constitutes a significant 41.91% of PBT, highlighting reliance on income sources outside core operations. Long-term growth metrics also paint a subdued picture: net sales have grown at an annualised rate of just 9.80% over the past five years, while operating profit growth has been a mere 2.86% annually. These figures suggest that the company’s underlying business momentum remains weak, limiting the scope for a more optimistic rating.

Quality Assessment: Low Profitability and Efficiency

Borosil Scientific’s quality parameters continue to weigh on its investment appeal. The company’s return on equity (ROE) is a low 4.53%, indicating limited profitability generated from shareholders’ funds. This figure is well below industry averages and signals poor management efficiency in deploying capital effectively. Return on capital employed (ROCE) is similarly modest at 6.91%, further underscoring the company’s struggles to generate robust returns.

Additionally, the company maintains a conservative capital structure with an average debt-to-equity ratio of zero, reflecting minimal leverage. While this reduces financial risk, it also suggests limited use of debt to fuel growth or enhance returns. The combination of low profitability and restrained financial leverage contributes to the cautious stance on the company’s quality grade.

Technical Analysis: Underperformance and Price Pressure

From a technical perspective, Borosil Scientific’s stock has underperformed key benchmarks over multiple time horizons. The share price has declined by 3.75% on the latest trading day, closing at ₹111.75, down from a previous close of ₹116.10. The stock’s 52-week high is ₹190.45, while the low is ₹109.80, indicating significant volatility and a downward trend over the past year.

Returns data further highlight the stock’s struggles: it has delivered a negative 33.62% return over the last 12 months, compared with an 8.65% gain in the Sensex over the same period. Year-to-date, the stock is down 6.91%, while the Sensex has risen 2.32%. Even over shorter periods such as one month and one week, Borosil Scientific has lagged the broader market, falling 5.46% and 3.5% respectively versus Sensex declines of 1.98% and 0.75%.

This persistent underperformance reflects investor caution and technical weakness, which continue to weigh on the stock’s outlook despite the improved valuation.

Peer Comparison and Market Positioning

Within the glass industry, Borosil Scientific’s valuation now appears more reasonable relative to peers. For example, Asahi India Glass and Borosil Renewables remain very expensive with PE ratios of 82.95 and 178.63 respectively, and EV/EBITDA multiples above 30. Borosil Scientific’s EV/EBITDA ratio of 22.33 and PE of 54.02 suggest a more moderate premium, which may attract value-conscious investors.

However, the company’s modest profitability and subdued growth prospects limit its appeal. Domestic mutual funds hold a negligible 0.04% stake, signalling limited institutional confidence. This low ownership by informed investors may reflect concerns about the company’s earnings quality and growth trajectory.

Outlook and Investment Considerations

While the upgrade from Strong Sell to Sell reflects a more balanced valuation and a slight easing of downside risk, Borosil Scientific remains a cautious proposition for investors. The company’s weak profitability metrics, negative recent earnings trends, and persistent underperformance relative to the broader market temper enthusiasm.

Investors should weigh the fair valuation against the company’s operational challenges and subdued growth outlook. The low ROE and ROCE suggest limited efficiency in capital utilisation, while the negative quarterly results highlight ongoing earnings volatility. The stock’s technical weakness and poor relative returns further underscore the risks involved.

Nonetheless, the improved valuation multiples may offer a more attractive entry point for value investors willing to monitor the company’s turnaround efforts and financial recovery. The absence of debt provides some financial stability, which could support future growth if operational performance improves.

Summary of Key Metrics

At the time of the rating change on 19 January 2026, Borosil Scientific’s key financial and valuation metrics were as follows:

• PE Ratio: 54.02 (Fair valuation)


• Price to Book Value: 2.45


• EV to EBITDA: 22.33


• ROE (Latest): 4.53%


• ROCE (Latest): 6.91%


• Debt to Equity: 0.0 (Low leverage)


• 1-Year Stock Return: -33.62% vs Sensex +8.65%


• Market Cap Grade: 3 (Moderate size)

These figures illustrate the mixed picture that led to the rating upgrade: fair valuation balanced against weak profitability and disappointing returns.

Conclusion

Borosil Scientific Ltd’s investment rating upgrade to Sell from Strong Sell is primarily driven by a more reasonable valuation profile, which now places the stock in a fair value category relative to its industry peers. However, the company’s ongoing financial challenges, including low profitability, negative recent earnings trends, and underwhelming stock performance, continue to constrain its investment appeal.

Investors should approach the stock with caution, recognising that while valuation risks have moderated, operational and market risks remain significant. Monitoring future quarterly results and any improvements in management efficiency will be critical to reassessing the company’s outlook and potential for further rating upgrades.

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