Fedders Holding Ltd Downgraded to Strong Sell Amid Weak Financials and Bearish Technicals

Quality Assessment: Weakening Fundamentals and Profitability

Fedders Holding’s quality grade has come under pressure due to a sustained decline in financial performance. The company has reported negative results for five consecutive quarters, with the latest Q2 FY25-26 figures underscoring the challenges. Profit Before Tax excluding Other Income (PBT LESS OI) plunged by 75.8% to a loss of ₹1.09 crore compared to the previous four-quarter average. Meanwhile, Profit After Tax (PAT) declined by 14.0% to ₹6.11 crore, and net sales hit a low of ₹53.54 crore, signalling weakening operational momentum.

Return on Equity (ROE), a key measure of profitability and capital efficiency, averaged a modest 7.08% over the long term, with the most recent quarter registering an even lower 4.2%. This level of ROE is below industry standards for NBFCs, indicating subpar returns for shareholders and raising concerns about the company’s ability to generate sustainable profits.

Valuation: Expensive Despite Weak Earnings

Despite the deteriorating earnings, Fedders Holding’s valuation remains elevated. The stock trades at a Price to Book Value (P/B) ratio of 1.5, which is expensive relative to its peers and historical averages. This premium valuation is difficult to justify given the company’s declining profitability and shrinking sales base. Over the past year, the stock price has fallen by 35.53%, yet profits have contracted by an even steeper 66%, highlighting a disconnect between price and fundamental performance.

Moreover, domestic mutual funds hold no stake in the company, a notable omission given their capacity for in-depth research and preference for fundamentally sound investments. This absence of institutional interest may reflect scepticism about the company’s valuation and business prospects.

Financial Trend: Negative Momentum Persists

The financial trend for Fedders Holding remains firmly negative. The company’s quarterly results have consistently disappointed, with key profitability metrics deteriorating sharply. The latest quarter’s PBT and PAT declines are symptomatic of deeper operational challenges. Net sales have contracted to their lowest level in recent memory, further exacerbating margin pressures.

Comparatively, the broader market has outperformed the stock significantly. While the BSE500 index has generated a positive return of 5.24% over the last year, Fedders Holding’s stock has declined by 35.53%. This underperformance is compounded by the company’s poor earnings trajectory, which has seen profits fall by 66% over the same period.

Technical Analysis: Shift to Bearish Signals

The downgrade to Strong Sell is also driven by a marked shift in technical indicators. The technical grade has moved from sideways to mildly bearish, reflecting weakening price momentum and increased selling pressure. Key technical signals include:

• MACD (Moving Average Convergence Divergence) shows a mixed picture with a mildly bullish weekly reading but a bearish monthly trend, indicating short-term attempts at recovery overshadowed by longer-term weakness.


• RSI (Relative Strength Index) on both weekly and monthly charts remains neutral, providing no clear momentum signal.


• Bollinger Bands are bearish on both weekly and monthly timeframes, suggesting the stock price is trending towards the lower band and increased volatility.


• Moving averages on the daily chart are mildly bullish, but this is insufficient to offset the broader bearish weekly and monthly trends.


• KST (Know Sure Thing) and Dow Theory indicators are mildly bearish on weekly and monthly scales, reinforcing the negative outlook.

Price action further confirms the technical weakness. The stock closed at ₹49.40 on 30 Dec 2025, down 4.23% from the previous close of ₹51.58. The 52-week high stands at ₹78.20, while the low is ₹41.05, indicating the stock is closer to its lower range and struggling to regain upward momentum.

Long-Term Performance: Mixed but Risky

While Fedders Holding has delivered impressive long-term returns over 3, 5, and 10 years—232.55%, 965.80%, and 1729.63% respectively—recent performance paints a starkly different picture. The stock’s year-to-date and one-year returns are deeply negative at -34.27% and -35.53%, respectively, contrasting sharply with the Sensex’s positive returns of 8.39% and 7.62% over the same periods. This divergence highlights the risks investors face if relying solely on historical gains without accounting for current fundamentals and market conditions.

Conclusion: Strong Sell Reflects Elevated Risks

MarketsMOJO’s downgrade of Fedders Holding Ltd to a Strong Sell rating is a comprehensive reflection of the company’s deteriorating fundamentals, expensive valuation, negative financial trends, and bearish technical outlook. The combination of five consecutive quarters of negative results, declining profitability, and a premium valuation multiple creates a challenging investment environment.

Technical indicators reinforce this cautionary stance, with multiple signals pointing towards continued weakness in the stock price. The absence of institutional ownership further underscores the lack of confidence among professional investors.

For investors, the downgrade serves as a warning to reassess exposure to Fedders Holding and consider alternative opportunities within the NBFC sector or broader market that offer stronger fundamentals and more favourable technical setups.

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