Cords Cable Industries Ltd Downgraded to Sell Amid Technical Weakness and Growth Concerns

Quality Assessment: Strong Operational Metrics but Growth Concerns

Cords Cable continues to demonstrate operational strength, highlighted by a high Return on Capital Employed (ROCE) of 15.70% for the half-year period, with a peak ROCE of 16.63% in recent quarters. The company has maintained positive quarterly results for nine consecutive quarters, underscoring consistent profitability. Additionally, the Debtors Turnover Ratio stands at a robust 4.44 times, indicating efficient receivables management. Net sales for the latest quarter reached ₹235.61 crores, marking a healthy revenue base.

However, the company’s long-term growth trajectory raises concerns. Operating profit has grown at a compounded annual rate of just 12.84% over the past five years, which is modest relative to sector peers. Furthermore, the stock has underperformed the broader market, delivering a negative return of -1.64% over the last year compared to the BSE500’s 13.31% gain. This underperformance, despite solid profitability metrics, suggests challenges in sustaining growth momentum.

Valuation: Attractive but Reflective of Market Caution

From a valuation standpoint, Cords Cable appears attractively priced. The company’s Enterprise Value to Capital Employed ratio is a low 1.1, indicating that the stock trades at a discount relative to its capital base. Its Price/Earnings to Growth (PEG) ratio is 0.5, signalling undervaluation when factoring in earnings growth. This valuation discount is notable given the company’s strong ROCE of 17.3% in recent periods.

Despite these positives, the market’s cautious stance is evident in the stock’s subdued returns and the downgrade in its Mojo Grade from Hold to Sell. Investors appear to be pricing in the risks associated with the company’s slower growth and deteriorating technical outlook.

Financial Trend: Positive Quarterly Performance but Mixed Returns

The company’s recent quarterly financials have been encouraging, with Q3 FY25-26 showing positive results. Profits have risen by 25.6% over the past year, reflecting operational efficiency and cost control. Institutional investors have increased their stake by 0.66% in the previous quarter, now holding 2.04% collectively, signalling confidence from more sophisticated market participants.

Nonetheless, the stock’s price performance has been lacklustre. Over the past year, Cords Cable has generated a return of -1.64%, underperforming the Sensex’s 9.66% gain and the BSE500’s 13.31% return. This divergence between earnings growth and share price performance suggests that investors remain wary of the company’s growth prospects and broader market conditions.

Technical Analysis: Downgrade Driven by Bearish Indicators

The primary catalyst for the downgrade to Sell is the deterioration in technical indicators. The technical grade has shifted from mildly bearish to outright bearish, reflecting weakening momentum and increased downside risk. Key technical signals include:

• MACD: Weekly readings are bearish, with monthly trends mildly bearish, indicating sustained selling pressure.
• Moving Averages: Daily moving averages are bearish, suggesting the stock is trading below key support levels.
• Bollinger Bands: Both weekly and monthly bands show mildly bearish signals, pointing to increased volatility and potential downward movement.
• KST Indicator: Weekly KST is bearish, with monthly mildly bearish, reinforcing the negative momentum.

Other indicators such as RSI, Dow Theory, and On-Balance Volume (OBV) show no clear trend, but the dominant bearish signals have outweighed neutral or positive technical factors. The stock’s current price of ₹174.20 remains well below its 52-week high of ₹222.00, further underscoring the technical weakness.

Comparative Performance and Market Context

Over longer time horizons, Cords Cable has delivered impressive returns, outperforming the Sensex by a wide margin. The stock’s 3-year return stands at 158.65% versus the Sensex’s 35.81%, and over five and ten years, it has generated returns of 295.91% and 294.56% respectively, compared to the Sensex’s 59.83% and 259.08%. This long-term outperformance highlights the company’s underlying strength and market position.

However, the recent underperformance and technical deterioration have prompted a more cautious stance. The downgrade to Sell reflects a balanced view that, while the company remains fundamentally sound, near-term risks and technical signals warrant a defensive approach.

Investment Implications

Investors should weigh the company’s strong operational metrics and attractive valuation against the bearish technical outlook and recent price underperformance. The downgrade to Sell by MarketsMOJO reflects a comprehensive analysis across four key parameters: quality, valuation, financial trend, and technicals. While the company’s fundamentals remain solid, the technical signals suggest caution in the near term.

Given the stock’s current trading range near ₹174 and its 52-week low of ₹148.40, investors may consider monitoring for a technical reversal or improvement in growth trends before initiating new positions. Institutional buying indicates some confidence, but the broader market context and sector dynamics should also be factored into investment decisions.

Summary of Ratings and Scores

Cords Cable’s Mojo Score currently stands at 46.0, with a Mojo Grade of Sell, downgraded from Hold on 16 February 2026. The Market Cap Grade is 4, reflecting mid-tier market capitalisation. Technical indicators have shifted decisively bearish, while financial trends remain mixed with positive quarterly earnings but subdued price returns. The company’s valuation metrics remain attractive, but growth concerns and technical weakness have led to a more cautious stance.

Overall, the downgrade signals a prudent approach for investors, balancing the company’s operational strengths against emerging risks in the technical and market environment.

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