Understanding the Current Rating
The Strong Sell rating assigned to Epic Energy Ltd indicates a cautious stance for investors, signalling significant concerns across multiple evaluation parameters. This rating is derived from a detailed assessment of four key areas: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall recommendation, helping investors understand the risks and challenges facing the company in the present market environment.
Quality Assessment
As of 26 December 2025, Epic Energy Ltd’s quality grade remains below average. The company exhibits weak long-term fundamental strength, with an average Return on Equity (ROE) of just 4.84%. This figure is modest compared to industry standards and suggests limited profitability relative to shareholder equity. Furthermore, operating profit growth over the past five years has been steady but not robust, averaging an annual increase of 19.53%. While growth is positive, it is insufficient to offset other weaknesses.
Another critical concern is the company’s ability to service its debt. The average EBIT to interest ratio stands at a worrying 0.08, indicating that operating earnings are barely sufficient to cover interest expenses. This weak debt servicing capacity raises questions about financial stability and the risk of liquidity constraints.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Valuation Considerations
Epic Energy Ltd is currently classified as very expensive based on valuation metrics. The stock trades at a Price to Book Value (P/B) ratio of 3.7, which is high relative to its sector peers and historical averages. This elevated valuation suggests that the market price may not adequately reflect the company’s underlying fundamentals.
Despite the high valuation, the company’s Return on Equity has improved to 13.8% recently, indicating some operational efficiency gains. However, this has not translated into positive stock performance. Over the past year, the stock has delivered a negative return of approximately -64.94%, significantly underperforming the broader market, which has generated a 5.83% return over the same period (BSE500 index).
Interestingly, profits have risen by 41% in the last year, resulting in a Price/Earnings to Growth (PEG) ratio of 0.5. While a PEG below 1 typically signals undervaluation relative to growth, the stock’s steep price decline and other fundamental weaknesses temper this positive signal.
Financial Trend Analysis
The financial grade for Epic Energy Ltd is flat, reflecting a lack of significant improvement or deterioration in recent quarters. The company reported flat results in September 2025, indicating stagnation in earnings and operational performance. This lack of momentum is a concern for investors seeking growth or turnaround potential.
Moreover, the company’s microcap status adds an element of risk due to lower liquidity and higher volatility compared to larger, more established firms. The flat financial trend combined with weak debt servicing capacity and high valuation creates a challenging investment environment.
Technical Outlook
From a technical perspective, Epic Energy Ltd is rated bearish. The stock has underperformed consistently over multiple time frames: a 1-day gain of 1.20% is overshadowed by declines of -0.32% over one week, -0.87% over one month, -6.93% over three months, and a significant -19.69% over six months. The year-to-date (YTD) return stands at a steep -63.03%, with a one-year return of -65.18%.
This persistent downward trend signals negative market sentiment and technical weakness, which may deter short-term traders and long-term investors alike. The bearish technical grade reinforces the cautionary stance implied by the fundamental and valuation assessments.
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What This Rating Means for Investors
The Strong Sell rating on Epic Energy Ltd serves as a clear warning signal for investors. It suggests that the stock currently carries elevated risks due to weak fundamentals, expensive valuation, stagnant financial trends, and bearish technical indicators. Investors should approach the stock with caution and consider the potential for further downside before committing capital.
For those holding the stock, this rating advises a thorough review of portfolio exposure and risk tolerance. For prospective investors, it highlights the need for careful due diligence and possibly waiting for signs of fundamental improvement or technical reversal before considering entry.
In summary, the combination of a low Mojo Score of 16.0, a downgrade from Sell to Strong Sell on 08 July 2025, and the current financial and market data as of 26 December 2025, paints a challenging picture for Epic Energy Ltd. The company’s microcap status and sector positioning within Non Banking Financial Companies (NBFC) add further complexity to its investment profile.
Looking Ahead
Investors monitoring Epic Energy Ltd should keep a close eye on upcoming quarterly results and any strategic initiatives aimed at improving profitability and debt servicing. Additionally, shifts in market sentiment or sector dynamics could influence the stock’s trajectory. Until then, the Strong Sell rating reflects the prevailing caution warranted by the company’s current standing.
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