Current Rating and Its Significance
MarketsMOJO’s Strong Sell rating for CHL Ltd indicates a cautious stance for investors, signalling that the stock currently exhibits multiple risk factors that outweigh potential rewards. This rating is based on a comprehensive assessment of the company’s quality, valuation, financial trend, and technical indicators. While the rating was assigned on 06 Nov 2025, it remains relevant today given the persistent challenges reflected in the latest data as of 08 February 2026.
Quality Assessment: Below Average Fundamentals
As of 08 February 2026, CHL Ltd’s quality grade is below average, reflecting weak long-term fundamental strength. The company’s net sales have grown at an annualised rate of 25.08% over the past five years, which might appear encouraging at first glance. However, operating profit growth has stagnated at 0% during the same period, signalling operational inefficiencies or margin pressures. Furthermore, the company reports a negative book value, which is a critical red flag indicating that liabilities exceed assets on the balance sheet. This weak financial foundation undermines investor confidence and raises concerns about the company’s ability to sustain growth or weather economic downturns.
Valuation: Risky and Unfavourable
The valuation grade for CHL Ltd is classified as risky. The stock currently trades at valuations that are unfavourable compared to its historical averages. Negative book value further compounds this risk, as it suggests the company’s net worth is in deficit. Over the past year, the stock has delivered a return of -17.81%, significantly underperforming the broader market benchmark, the BSE500, which has generated a positive return of 7.71% in the same period. This divergence highlights the market’s scepticism about CHL Ltd’s prospects and the premium risk investors bear by holding the stock.
Financial Trend: Negative and Deteriorating
Financially, CHL Ltd is facing considerable headwinds. The latest quarterly results ending September 2025 reveal a sharp deterioration in profitability. Profit Before Tax (PBT) excluding other income plunged to a loss of ₹17.21 crores, representing a staggering decline of 836.6% compared to the previous four-quarter average. Similarly, the Profit After Tax (PAT) for the quarter was a loss of ₹12.04 crores, down by 2590.5%. These figures underscore a severe erosion of earnings quality and raise questions about the company’s operational viability. The Return on Capital Employed (ROCE) for the half-year period stands at a low 10.96%, indicating suboptimal utilisation of capital resources. Additionally, the company carries a high debt burden, with an average debt-to-equity ratio of 0 times, which, while seemingly low, is misleading given the negative equity base.
Technical Outlook: Bearish Momentum
From a technical perspective, CHL Ltd’s stock exhibits bearish characteristics. The Mojo Score, a composite indicator reflecting price momentum and other technical factors, has dropped sharply from 33 to 3 following the rating update on 06 Nov 2025. This decline signals weakening investor sentiment and a lack of positive price catalysts. Recent price movements reinforce this trend, with the stock falling 2.63% over the past month and 7.96% over three months. Year-to-date, the stock is down 6.45%, and over six months it has declined 17.31%. These trends suggest that the stock is under selling pressure and may continue to face downward momentum in the near term.
Comparative Performance and Market Context
CHL Ltd’s underperformance relative to the broader market is stark. While the BSE500 index has delivered a 7.71% return over the last year, CHL Ltd’s stock has declined by 17.81%. This significant gap highlights the challenges the company faces within the Hotels & Resorts sector, which itself has been volatile amid changing consumer behaviour and economic uncertainties. Investors should consider this relative weakness when evaluating portfolio allocations and risk exposure.
Crushing the market! This Small Cap from Aerospace & Defense just earned its spot in our Top 1% with impressive gains. Don't let this opportunity slip through your hands.
- - Recent Top 1% qualifier
- - Impressive market performance
- - Sector leader
What This Rating Means for Investors
For investors, the Strong Sell rating on CHL Ltd serves as a cautionary signal. It suggests that the stock currently carries elevated risks due to weak fundamentals, unfavourable valuation, deteriorating financial trends, and negative technical momentum. Investors should carefully assess their risk tolerance and consider whether exposure to CHL Ltd aligns with their portfolio objectives. The rating implies that the stock may continue to underperform or face further downside pressure in the near term.
Sector and Market Considerations
Operating within the Hotels & Resorts sector, CHL Ltd faces sector-specific challenges including fluctuating demand, rising operational costs, and competitive pressures. The company’s microcap status further adds liquidity and volatility considerations. Given the current financial and technical outlook, investors might prefer to explore alternative opportunities within the sector or broader market that demonstrate stronger fundamentals and more favourable risk-reward profiles.
Summary of Key Metrics as of 08 February 2026
To summarise, the key metrics shaping the Strong Sell rating include:
- Mojo Score: 3.0 (Strong Sell grade)
- Quality Grade: Below average
- Valuation Grade: Risky, with negative book value
- Financial Grade: Negative, with significant quarterly losses and low ROCE
- Technical Grade: Bearish, with sustained price declines over multiple timeframes
- Stock Returns: 1 Year -17.81%, underperforming BSE500’s +7.71%
These factors collectively inform the current rating and provide a comprehensive picture of CHL Ltd’s investment profile.
Investor Takeaway
Investors should approach CHL Ltd with caution given the prevailing risks and weak outlook. The Strong Sell rating reflects a consensus view that the stock is not favourable for accumulation at this time. Monitoring future quarterly results and sector developments will be essential to reassess the company’s prospects. Until then, the recommendation is to avoid new positions and consider risk mitigation strategies for existing holdings.
Unlock special upgrade rates for a limited period. Start Saving Now →
