Current Rating and Its Significance
The current Sell rating indicates that MarketsMOJO’s analysis suggests investors should consider reducing or exiting their positions in Deepak Fertilisers & Petrochemicals Corp Ltd at this time. This recommendation is based on a comprehensive evaluation of the company’s quality, valuation, financial trends, and technical indicators. While the rating was assigned in early January, the detailed assessment below uses the most recent data available to provide a clear picture of the stock’s present condition.
Quality Assessment
As of 25 February 2026, Deepak Fertilisers & Petrochemicals maintains a good quality grade. This reflects the company’s established presence in the fertilisers sector and its operational capabilities. Despite this, recent quarterly results have shown signs of strain. The company reported a significant decline in profit after tax (PAT) for the quarter ending December 2025, with PAT falling by 42.5% compared to the previous four-quarter average, registering ₹141.49 crores. This sharp drop in profitability raises concerns about the sustainability of earnings and operational efficiency in the near term.
Valuation Perspective
From a valuation standpoint, the stock is currently graded as attractive. This suggests that, relative to its earnings and asset base, Deepak Fertilisers is trading at a price level that could be considered reasonable or undervalued by some metrics. However, valuation attractiveness alone does not offset the risks posed by deteriorating financial trends and technical weakness. Investors should weigh this factor carefully against other negative indicators before making investment decisions.
Financial Trend Analysis
The financial trend for Deepak Fertilisers is negative as of the latest data. The company’s interest expenses have increased substantially, with quarterly interest costs rising by 28.91% to ₹96.40 crores. This increase in financial burden has led to a concerning decline in the operating profit to interest coverage ratio, which currently stands at a low 3.66 times. Such a ratio indicates reduced cushion to service debt, signalling potential liquidity pressures. These factors contribute to the overall negative financial trend and weigh heavily on the stock’s outlook.
Technical Indicators
Technically, the stock is rated bearish. Price performance over recent months has been weak, with the stock declining 15.23% over the past month and 27.51% over the past three months. Year-to-date, the stock has lost 22.62% of its value, underperforming the broader market significantly. Over the last year, while the BSE500 index has delivered a positive return of 14.44%, Deepak Fertilisers has generated a negative return of 5.94%. This underperformance reflects investor caution and a lack of positive momentum in the stock’s price action.
Performance and Market Context
As of 25 February 2026, the stock’s one-day change was a modest gain of 0.30%, but this short-term uptick does little to offset the broader downtrend. The company’s recent quarterly results and financial metrics highlight challenges that have contributed to the current rating. The combination of declining profitability, rising interest costs, and bearish technical signals suggests that the stock faces headwinds in the near term.
Implications for Investors
For investors, the Sell rating serves as a cautionary signal. It implies that the risks associated with holding the stock currently outweigh the potential rewards. While the valuation appears attractive, the deteriorating financial health and weak price momentum suggest that investors should carefully reconsider their exposure. This rating encourages a more defensive stance, prioritising capital preservation until clearer signs of recovery emerge.
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Summary of Key Metrics as of 25 February 2026
The Mojo Score for Deepak Fertilisers currently stands at 36.0, reflecting the overall Sell grade. This score has declined by 14 points since the previous rating, which was a Hold. The company’s market capitalisation remains in the smallcap category, and it operates within the fertilisers sector, which has faced various cyclical and structural challenges recently.
Investors should note that the company’s operating profit to interest coverage ratio at 3.66 times is at its lowest quarterly level, signalling increased financial risk. The rise in interest expenses by nearly 29% further exacerbates this concern. Meanwhile, the significant drop in quarterly PAT by 42.5% highlights operational pressures that have yet to be resolved.
Looking Ahead
Given the current financial and technical landscape, Deepak Fertilisers & Petrochemicals Corp Ltd’s Sell rating reflects a cautious outlook. Investors are advised to monitor upcoming quarterly results and sector developments closely. Improvements in profitability, debt servicing capacity, and price momentum would be necessary to reconsider the stock’s outlook positively.
Until such improvements materialise, the recommendation remains to limit exposure or exit positions to manage downside risk effectively.
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