Excel Industries Ltd Upgraded to Sell on Mixed Financial and Technical Signals

Financial Trend Deteriorates Amid Quarterly Setbacks

Excel Industries reported a challenging quarter ending December 2025, with key financial metrics showing marked declines. The company’s Profit Before Tax excluding other income (PBT LESS OI) fell sharply by 63.1% to ₹6.10 crores compared to the previous four-quarter average. Similarly, Profit After Tax (PAT) dropped 54.1% to ₹8.44 crores, while net sales declined by 8.8% to ₹233.54 crores. These figures have driven the financial trend score down from flat to negative, with the financial score deteriorating from -5 to -11 over the past three months.

Non-operating income remains a significant contributor, accounting for 45.58% of PBT, which raises concerns about the sustainability of earnings from core operations. The subdued financial performance is further underscored by a five-year operating profit compound annual growth rate (CAGR) of -1.32%, indicating persistent challenges in generating consistent growth.

Despite these setbacks, Excel Industries maintains a low debt-to-equity ratio, averaging zero, which provides some cushion against financial distress. However, the return on equity (ROE) remains modest at 4.07%, reflecting limited profitability relative to shareholder equity.

Valuation Improves to Attractive from Very Attractive

In contrast to the weakening financial trend, Excel Industries’ valuation grade has improved from very attractive to attractive. The stock currently trades at a price-to-earnings (PE) ratio of 16.94, which is considerably lower than many of its peers in the pesticides and agrochemicals industry. For instance, Bayer CropScience trades at a PE of 33.14, while BASF India is at 41.34. The company’s price-to-book value stands at a low 0.71, signalling undervaluation relative to its net asset base.

Enterprise value multiples also support the attractive valuation thesis, with EV to EBITDA at 10.17 and EV to EBIT at 15.31. These metrics suggest that the market is pricing Excel Industries more favourably compared to several competitors, some of which are classified as expensive or very expensive based on their valuation ratios.

Dividend yield remains modest at 1.35%, consistent with the company’s conservative payout policy amid earnings volatility. Return on capital employed (ROCE) is also subdued at 4.23%, indicating limited efficiency in generating returns from invested capital.

Technical Indicators Show Mild Improvement

The technical grade for Excel Industries has shifted from bearish to mildly bearish, reflecting a cautious but slightly more optimistic market sentiment. Weekly technical indicators such as the Moving Average Convergence Divergence (MACD) and the Know Sure Thing (KST) oscillator have turned mildly bullish, while monthly indicators remain bearish. The Relative Strength Index (RSI) shows no clear signal on both weekly and monthly charts.

Bollinger Bands on the weekly timeframe indicate bullish momentum, although the monthly bands remain mildly bearish. Daily moving averages suggest a mildly bearish trend, highlighting short-term volatility. On-Balance Volume (OBV) readings are mildly bullish on both weekly and monthly scales, suggesting accumulation by investors despite recent price fluctuations.

Price action has been relatively strong in the short term, with the stock gaining 8.88% over the past week and 8.93% over the last month, outperforming the Sensex which rose 1.59% and declined 1.74% respectively over the same periods. Year-to-date returns for Excel Industries stand at 9.37%, contrasting with a negative 1.92% for the Sensex. However, the stock has underperformed over longer horizons, with a one-year return of -24.81% compared to the Sensex’s 7.07% gain.

Quality Assessment Remains Challenging

Excel Industries’ overall quality rating remains low, reflected in its MarketsMOJO Mojo Score of 34.0 and a Mojo Grade of Sell, upgraded from Strong Sell. The company’s limited long-term growth, negative recent financial trends, and modest profitability metrics weigh heavily on quality assessments. Domestic mutual funds hold a negligible stake of 0.01%, indicating limited institutional confidence in the stock’s near-term prospects.

Despite the company’s sizeable market capitalisation and presence in the specialty chemicals sector, its financial and operational performance has not inspired strong conviction among investors. The stock’s 52-week price range between ₹798.50 and ₹1,438.00 highlights significant volatility, with the current price of ₹1,021.50 closer to the lower end of this spectrum.

Comparative Performance and Outlook

Over the long term, Excel Industries has delivered mixed returns relative to the broader market. While the stock has generated a remarkable 447.43% return over ten years, outperforming the Sensex’s 239.52%, its recent performance has been disappointing. The five-year return of 20.93% lags behind the Sensex’s 64.75%, and the three-year return of -4.59% contrasts sharply with the Sensex’s 38.13% gain.

This divergence highlights the company’s struggle to maintain consistent growth momentum amid sectoral and operational challenges. The recent downgrade in financial trend and modest technical improvements suggest that while some recovery signs are emerging, significant risks remain.

Investors should weigh the company’s attractive valuation against its deteriorating financial fundamentals and cautious technical outlook. The low debt profile and reasonable price multiples offer some defensive qualities, but the lack of strong earnings growth and institutional interest may limit upside potential in the near term.

Conclusion: A Cautious Upgrade Reflecting Mixed Signals

The upgrade of Excel Industries’ investment rating from Strong Sell to Sell reflects a balanced reassessment of its current position. While financial trends have worsened, valuation metrics have become more attractive, and technical indicators show tentative signs of improvement. The company’s quality remains under pressure due to weak profitability and limited growth prospects.

For investors, this rating change signals a cautious stance: the stock may offer value at current levels but carries risks that warrant careful monitoring. Those considering exposure to Excel Industries should remain vigilant about quarterly earnings trends and broader sector dynamics, while also exploring alternative opportunities within the specialty chemicals space.

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