Understanding the Current Rating
The 'Hold' rating assigned to Gravity (India) Ltd indicates a neutral stance for investors, suggesting that the stock is expected to perform in line with the broader market or sector averages in the near term. This rating reflects a balance of strengths and weaknesses across several key parameters including quality, valuation, financial trends, and technical indicators. It advises investors to maintain their current holdings without aggressive buying or selling.
Quality Assessment
As of 26 December 2025, Gravity (India) Ltd’s quality grade is below average. The company exhibits weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of just 0.02%. This low ROCE suggests that the company is generating minimal returns from its capital base, which is a concern for long-term value creation. Operating profit has grown at an annual rate of 11.59% over the past five years, indicating moderate growth but not at a pace that strongly impresses quality-focused investors.
Moreover, the company’s ability to service its debt is weak, with an average EBIT to Interest ratio of -2.10, signalling challenges in covering interest expenses from operating earnings. This financial strain is a cautionary factor when considering the company’s overall quality.
Valuation Considerations
Currently, Gravity (India) Ltd is classified as very expensive based on valuation metrics. The ROCE stands at a negative -72.9%, and the Enterprise Value to Capital Employed ratio is 2.8, which is high relative to typical benchmarks. Despite this, the stock trades at a discount compared to its peers’ average historical valuations, offering some relative value.
The latest data shows that over the past year, the stock has delivered a robust return of 63.77%, while profits have surged by 120.1%. This results in a PEG ratio of 0.1, which is low and may indicate undervaluation relative to earnings growth. However, the very expensive valuation grade suggests that investors should be cautious about paying a premium without stronger fundamental support.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend and Recent Performance
The financial grade for Gravity (India) Ltd is positive, reflecting encouraging recent results. As of 26 December 2025, the company reported a higher Profit After Tax (PAT) of ₹1.52 crores for the latest six months. Quarterly PBDIT reached a peak of ₹1.94 crores, while Profit Before Tax excluding other income also hit a high of ₹1.90 crores. These figures indicate an improving operational performance and profitability trend in the short term.
Stock returns have been notably strong in recent months, with a 1-month gain of 32.16%, a 3-month increase of 86.47%, and a 6-month rise of 93.49%. The one-year return stands at 63.77%, signalling significant investor interest and momentum. However, the 1-week return shows a decline of 4.16%, and the 1-day change is marginally negative at -0.09%, suggesting some short-term volatility.
Technical Outlook
The technical grade for Gravity (India) Ltd is bullish, indicating positive momentum from a market perspective. This suggests that the stock’s price trend is upward, supported by favourable technical indicators such as moving averages and volume patterns. For investors who incorporate technical analysis into their decision-making, this bullish signal may support holding the stock or considering entry points aligned with broader market trends.
Promoter Confidence and Corporate Governance
One area of concern is the reducing promoter confidence. As of the latest data, promoters have decreased their stake by 3.91% over the previous quarter and currently hold only 5.99% of the company. This reduction in promoter holding may indicate diminished confidence in the company’s future prospects, which investors should monitor closely as it can impact governance and strategic direction.
Summary for Investors
In summary, Gravity (India) Ltd’s 'Hold' rating reflects a nuanced picture. The company shows positive financial trends and bullish technical signals, which are encouraging for near-term performance. However, the below-average quality grade, very expensive valuation, and declining promoter stake temper enthusiasm and suggest caution.
Investors should consider maintaining existing positions while closely monitoring upcoming financial results and market developments. The current rating advises neither aggressive accumulation nor outright selling, but rather a balanced approach based on ongoing performance and valuation shifts.
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Final Thoughts
Gravity (India) Ltd operates within the garments and apparels sector as a microcap company, which inherently carries higher volatility and risk. The current 'Hold' rating by MarketsMOJO, supported by a Mojo Score of 50.0, reflects a cautious but balanced outlook. Investors should weigh the company’s improving short-term financials and bullish technicals against its valuation challenges and promoter stake reduction.
Careful monitoring of quarterly results, debt servicing ability, and market sentiment will be essential for making informed decisions regarding this stock. The 'Hold' rating serves as a reminder to maintain vigilance and avoid impulsive moves until clearer trends emerge.
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