Current Rating and Its Significance
The 'Hold' rating assigned to Gujarat State Fertilizers & Chemicals Ltd. indicates a neutral stance for investors. It suggests that while the stock is not currently a strong buy, it also does not warrant a sell recommendation. Investors are advised to maintain their existing positions and monitor the company’s developments closely. This rating reflects a balance between the company’s strengths and challenges as assessed through multiple parameters.
Quality Assessment
As of 01 February 2026, the company’s quality grade is classified as 'good'. This is supported by a low average debt-to-equity ratio of zero, indicating a conservative capital structure with minimal reliance on debt financing. Such financial prudence reduces risk and enhances stability. Additionally, Gujarat State Fertilizers & Chemicals Ltd. has demonstrated healthy long-term growth, with operating profit expanding at an annual rate of 20.38%. The company has also reported positive results for the last three consecutive quarters, underscoring consistent operational performance.
Valuation Considerations
The valuation grade is currently 'fair'. The stock trades at a price-to-book value of 0.6, which is modestly below one, suggesting that the market values the company at a discount to its book value. However, it is important to note that the stock is trading at a premium relative to its peers’ average historical valuations. The return on equity (ROE) stands at 5.4%, reflecting moderate profitability. Despite the stock’s negative return of -11.84% over the past year, profits have risen by 26.5%, resulting in a favourable PEG ratio of 0.4. This indicates that earnings growth is not fully priced into the current share price, which may appeal to value-oriented investors.
Financial Trend Analysis
The financial grade is assessed as 'positive'. The company’s net sales for the latest quarter reached ₹3,187.37 crores, growing at a rate of 20.96%. The dividend payout ratio (DPR) for the year is relatively high at 33.71%, signalling a shareholder-friendly approach. Moreover, the debtors turnover ratio for the half-year period is robust at 19.64 times, reflecting efficient receivables management. These metrics collectively indicate a healthy financial trajectory and operational efficiency.
Technical Outlook
From a technical perspective, the stock is graded as 'mildly bearish'. Recent price movements show a 1-day decline of 0.62%, with a 3-month return of -3.30% and a 6-month return of -7.71%. Year-to-date, the stock has gained 1.07%, but it has underperformed the broader market benchmark BSE500, which has delivered a 7.80% return over the past year. Institutional holdings are relatively high at 24.83%, indicating that knowledgeable investors maintain significant stakes, which may provide some price support despite recent weakness.
Performance Summary
As of 01 February 2026, Gujarat State Fertilizers & Chemicals Ltd. has delivered mixed returns. While the stock has declined by 12.08% over the last year, its operational fundamentals and profit growth remain encouraging. The company’s consistent quarterly results and strong operating profit growth suggest resilience in its core business. However, the stock’s underperformance relative to the market and a mildly bearish technical outlook temper enthusiasm, justifying the current 'Hold' rating.
Just made the cut! This Mid Cap from the Heavy Electrical Equipment sector entered our elite Top 1% list recently. Discover it before the crowd catches on!
- - Top-rated across platform
- - Strong price momentum
- - Near-term growth potential
Investor Implications
For investors, the 'Hold' rating on Gujarat State Fertilizers & Chemicals Ltd. suggests a cautious approach. The company’s strong fundamentals and positive financial trends provide a solid foundation, but the current valuation and technical signals advise against aggressive accumulation. Investors already holding the stock may consider maintaining their positions while monitoring market developments and quarterly results closely. Prospective buyers might wait for clearer signs of technical strength or valuation improvement before initiating new positions.
Sector and Market Context
Operating within the fertilisers sector, Gujarat State Fertilizers & Chemicals Ltd. faces both opportunities and challenges linked to commodity price fluctuations, regulatory policies, and agricultural demand cycles. The company’s ability to sustain profit growth and maintain operational efficiency will be critical in navigating these dynamics. Compared to the broader market, the stock’s recent underperformance highlights the importance of sector-specific factors and company fundamentals in investment decisions.
Summary of Key Metrics as of 01 February 2026
- Market Capitalisation: Smallcap segment
- Mojo Score: 52.0 (Hold)
- Quality Grade: Good
- Valuation Grade: Fair
- Financial Grade: Positive
- Technical Grade: Mildly Bearish
- 1-Year Stock Return: -12.08%
- Operating Profit Growth (Annual): 20.38%
- Net Sales Growth (Quarterly): 20.96%
- ROE: 5.4%
- Price to Book Value: 0.6
- Dividend Payout Ratio (Yearly): 33.71%
- Debtors Turnover Ratio (Half-Yearly): 19.64 times
- Institutional Holdings: 24.83%
These figures collectively underpin the current 'Hold' rating, reflecting a company with solid fundamentals but facing valuation and technical challenges that warrant a neutral investment stance.
Unlock special upgrade rates for a limited period. Start Saving Now →
