Exxaro Tiles Ltd is Rated Hold by MarketsMOJO

Current Rating and Its Significance

On 04 Nov 2025, MarketsMOJO revised Exxaro Tiles Ltd’s rating from 'Sell' to 'Hold', reflecting a more balanced view of the stock’s prospects. A 'Hold' rating suggests that investors should maintain their existing positions rather than aggressively buying or selling the stock. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Understanding these factors helps investors gauge the stock’s potential risks and rewards in the current market environment.

Here’s How Exxaro Tiles Ltd Looks Today

As of 03 January 2026, Exxaro Tiles Ltd is classified as a microcap company operating within the diversified consumer products sector. The company’s Mojo Score stands at 53.0, which corresponds to a 'Hold' grade, indicating a moderate outlook. This score improved by 10 points from 43 at the time of the previous rating, signalling some positive developments in the company’s profile.

Quality Assessment

The quality grade for Exxaro Tiles Ltd is below average, reflecting challenges in its long-term fundamental strength. The company has experienced a negative compound annual growth rate (CAGR) of -11.44% in operating profits over the past five years, indicating a contraction in core earnings. Additionally, the average return on equity (ROE) is a modest 1.54%, suggesting limited profitability relative to shareholders’ funds. Despite these concerns, the company has demonstrated resilience by reporting positive profits after tax (PAT) for the last four consecutive quarters, with the latest six-month PAT at ₹2.01 crores. This consistency in profitability provides some reassurance to investors about the company’s operational stability.

Valuation Perspective

Valuation is a key strength for Exxaro Tiles Ltd, earning a 'very attractive' grade. The company’s return on capital employed (ROCE) for the half-year period is 5.4%, and it trades at an enterprise value to capital employed ratio of 1.2, which is lower than its peers’ historical averages. This discount suggests that the stock is undervalued relative to its capital base and earnings potential. Furthermore, the price-to-earnings-to-growth (PEG) ratio stands at a low 0.1, signalling that the stock’s price is not fully reflecting its recent profit growth, which surged by 370.4% over the past year. Such valuation metrics may appeal to value-oriented investors seeking opportunities in microcap stocks with turnaround potential.

Financial Trend and Stability

The financial trend for Exxaro Tiles Ltd is positive, supported by several encouraging indicators. The company’s ROCE for the half-year period reached a peak of 5.50%, while the debt-to-equity ratio remains low at 0.32 times, reflecting a conservative capital structure and manageable leverage. These factors contribute to a stable financial footing, which is critical for sustaining operations and funding growth initiatives. However, it is important to note that the company’s long-term fundamentals remain weak, as evidenced by its negative operating profit growth and low ROE.

Technical Outlook

From a technical perspective, the stock exhibits a mildly bullish trend. Recent price movements show modest gains, with a 0.25% increase on the latest trading day and a 1.25% rise over the past week. However, the stock has experienced some volatility, including a 16.96% decline over six months and a 9.01% loss over the past year. Despite this, the technical grade suggests that the stock may be stabilising, potentially offering a base for future recovery. Investors should monitor price action closely alongside fundamental developments.

Performance Relative to Benchmarks

Exxaro Tiles Ltd has underperformed the BSE500 benchmark consistently over the last three years. While the stock’s one-year return is -9.01%, the company’s profits have grown substantially, highlighting a disconnect between earnings performance and market valuation. This underperformance may reflect investor caution given the company’s microcap status, sector challenges, and quality concerns. Nonetheless, the attractive valuation and improving financial metrics provide a rationale for the current 'Hold' rating, signalling that the stock is neither a clear buy nor a sell at this stage.

Shareholding and Market Capitalisation

The majority of Exxaro Tiles Ltd’s shares are held by non-institutional investors, which can influence liquidity and price stability. As a microcap stock, it tends to have lower trading volumes and higher volatility compared to larger peers. Investors should consider these factors when assessing the stock’s suitability for their portfolios, especially in the context of risk tolerance and investment horizon.

What the Hold Rating Means for Investors

For investors, the 'Hold' rating on Exxaro Tiles Ltd suggests a cautious approach. The stock currently offers value through its attractive valuation and improving financial metrics, but it also carries risks due to weak long-term fundamentals and historical underperformance. Investors should weigh these factors carefully, considering their own investment goals and risk appetite. Those already holding the stock may choose to maintain their positions while monitoring quarterly results and market developments. Prospective investors might wait for clearer signs of sustained improvement before committing fresh capital.

Summary

In summary, Exxaro Tiles Ltd’s current 'Hold' rating by MarketsMOJO reflects a balanced view of the company’s prospects as of 03 January 2026. While the stock faces challenges in quality and historical performance, its very attractive valuation, positive financial trends, and mildly bullish technical signals provide a foundation for cautious optimism. Investors should remain vigilant and consider both the opportunities and risks inherent in this microcap stock within the diversified consumer products sector.

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