Bridge Securities Ltd Rating Upgraded to Sell Amid Mixed Technical and Fundamental Signals

Quality Assessment: Flat Financial Performance and Weak Growth

Bridge Securities Ltd, operating within the Non Banking Financial Company (NBFC) sector, continues to grapple with a lacklustre financial trajectory. The company reported flat results in the second quarter of FY25-26, with net sales exhibiting a negative compound annual growth rate (CAGR) of -1.70%. This stagnation in revenue growth highlights persistent operational challenges. Furthermore, cash and cash equivalents have dwindled to a mere ₹0.06 crore in the half-year period, signalling tight liquidity conditions.

Despite these concerns, the company maintains a robust return on equity (ROE) of 25.5%, which is commendable within the NBFC space. However, this strong ROE is overshadowed by a significant contraction in profits, which have declined by 26.9% over the past year. This divergence between profitability and revenue growth underlines the uneven quality of earnings and raises questions about sustainability.

Valuation: Expensive Despite Discount to Peers

Bridge Securities Ltd’s valuation metrics present a mixed picture. The stock trades at a price-to-book (P/B) ratio of 11.3, categorising it as very expensive relative to its book value. This premium valuation is somewhat tempered by the fact that the stock is currently trading at a discount compared to the average historical valuations of its peer group within the NBFC sector. Investors should note that such a high P/B ratio demands consistent earnings growth and strong fundamentals, which the company has yet to demonstrate convincingly.

Over the last year, the stock has generated a modest return of 6.15%, underperforming the broader Sensex benchmark, which returned 7.85% over the same period. However, Bridge Securities has delivered exceptional long-term returns, with a staggering 1,361.18% gain over three years and 1,456.39% over five years, far outpacing the Sensex’s 41.57% and 76.39% respectively. This long-term outperformance suggests that the stock has been a strong wealth creator historically, though recent performance has been more muted.

Financial Trend: Flat Quarter and Declining Profitability

The financial trend for Bridge Securities remains under pressure. The company’s flat performance in Q2 FY25-26, combined with a negative sales CAGR, indicates a lack of growth momentum. Profitability has also deteriorated, with a 26.9% decline in profits over the past year. This contraction is concerning, especially given the high valuation multiples the stock commands.

Liquidity constraints are evident from the minimal cash reserves, which could limit the company’s ability to invest in growth initiatives or weather economic headwinds. These factors collectively contribute to a weak fundamental outlook, which is reflected in the company’s current Mojo Grade of Sell, albeit an improvement from the previous Strong Sell rating.

Technicals: Shift to Mildly Bullish Signals

The primary catalyst for the upgrade in Bridge Securities’ investment rating is the improvement in technical indicators. The technical trend has shifted from sideways to mildly bullish, signalling a potential positive momentum in the stock’s price action. Key technical metrics present a nuanced picture:

• MACD: Weekly readings remain mildly bearish, but monthly MACD has turned bullish, suggesting longer-term momentum is improving.


• RSI: Both weekly and monthly Relative Strength Index (RSI) show no clear signal, indicating the stock is neither overbought nor oversold.


• Bollinger Bands: Weekly bands are bearish, but monthly bands have turned mildly bullish, reflecting a possible stabilisation in volatility.


• Moving Averages: Daily moving averages are mildly bullish, supporting the recent positive price trend.


• KST (Know Sure Thing): Both weekly and monthly KST indicators remain mildly bearish, suggesting caution in momentum strength.


• Dow Theory: No definitive trend is observed on weekly or monthly charts, indicating a lack of clear directional conviction.

Despite some bearish signals, the overall technical picture has improved enough to justify the upgrade from Strong Sell to Sell. The stock’s current price stands at ₹12.42, down slightly from the previous close of ₹12.60, with a 52-week high of ₹15.92 and a low of ₹8.70. Today’s trading range has been narrow, between ₹12.42 and ₹12.80, reflecting cautious investor sentiment.

Comparative Returns: Outperformance Over Longer Horizons

While short-term returns have been mixed, Bridge Securities has demonstrated remarkable long-term performance. Over the past three years, the stock has surged by 1,361.18%, vastly outperforming the Sensex’s 41.57% gain. Similarly, five- and ten-year returns stand at 1,456.39% and 1,405.45% respectively, compared to the Sensex’s 76.39% and 234.01% over the same periods.

This consistent long-term outperformance underscores the company’s ability to generate shareholder value over extended periods, despite recent fundamental and technical challenges. However, investors should weigh this historical strength against current valuation and earnings trends before making investment decisions.

Conclusion: A Cautious Upgrade Reflecting Technical Optimism Amid Fundamental Weakness

The upgrade of Bridge Securities Ltd’s Mojo Grade from Strong Sell to Sell on 5 January 2026 reflects a cautious optimism driven by improved technical indicators. While the company’s fundamentals remain weak, characterised by flat sales growth, declining profits, and minimal cash reserves, the shift to a mildly bullish technical trend suggests potential for near-term price stability or modest appreciation.

Investors should remain vigilant given the stock’s expensive valuation and the mixed signals from various technical metrics. The company’s impressive long-term returns provide some comfort, but recent financial trends warrant careful scrutiny. Overall, the rating change signals a less negative outlook but stops short of endorsing the stock as a buy, recommending instead a watchful stance.

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