Haleos Labs Limited Upgraded to Hold by MarketsMOJO on Improved Technicals and Financials

Quality Assessment: Mixed Fundamentals with Signs of Stabilisation

Haleos Labs Limited operates within the Pharmaceuticals & Biotechnology sector, an industry known for its volatility and regulatory challenges. The company’s long-term fundamental strength remains moderate, with an average Return on Capital Employed (ROCE) of 9.15%, which is below the sector’s more robust performers. Over the past five years, net sales have grown at a modest annual rate of 10.05%, while operating profit has expanded at 18.86%, indicating steady but unspectacular growth.

However, recent quarterly results for Q2 FY25-26 have shown a positive turnaround after two consecutive quarters of negative performance. Profit Before Tax Less Other Income (PBT LESS OI) surged by 203.38% to ₹8.07 crores, signalling a potential inflection point. Additionally, the company’s debt-equity ratio has improved to a low 0.34 times, reflecting a conservative capital structure that reduces financial risk. The operating profit to interest ratio has also reached a peak of 8.38 times, underscoring enhanced interest coverage and operational efficiency.

Valuation: Attractive Relative to Peers Despite Profit Pressure

Haleos Labs currently trades at ₹1,284.70, up 3.69% on the day, with a 52-week range between ₹956.05 and ₹1,680.00. The stock’s valuation appears attractive, with an Enterprise Value to Capital Employed ratio of 1.7, which is below the historical average for its peer group. This discount suggests that the market may be undervaluing the company relative to its capital base and earnings potential.

Despite this, the stock’s profit trajectory over the past year has been disappointing, with a 14.5% decline in profits. The share price has generated a modest 0.52% return over the last 12 months, lagging behind the Sensex’s 5.37% gain. However, over longer horizons, Haleos Labs has outperformed significantly, delivering a 119.57% return over three years and 124.26% over five years, compared to Sensex returns of 36.26% and 64.00% respectively. This long-term outperformance supports the case for a Hold rating, as the company appears to be consolidating after a period of volatility.

Financial Trend: Positive Quarterly Momentum but Cautious Outlook

The recent quarterly financials have been a key driver behind the rating upgrade. The company’s return to profitability in September 2025 after two negative quarters is a positive development. The substantial growth in PBT LESS OI and improved interest coverage ratios indicate operational improvements and better cost management.

Nevertheless, the weak long-term growth fundamentals and the modest ROCE of 11% suggest that investors should remain cautious. The company’s sales and profit growth rates, while positive, do not yet signal a robust acceleration that would warrant a more bullish rating. The Hold rating reflects this balanced view, acknowledging recent improvements while recognising ongoing challenges.

Technical Analysis: Shift to Mildly Bullish Signals

The most significant catalyst for the upgrade to Hold has been the change in technical indicators. The technical trend has shifted from sideways to mildly bullish, reflecting growing investor confidence. Key technical metrics present a nuanced picture:

• MACD: Both weekly and monthly charts remain mildly bearish, indicating some residual downward momentum.
• RSI: No clear signal on weekly or monthly timeframes, suggesting the stock is neither overbought nor oversold.
• Bollinger Bands: Both weekly and monthly readings are bullish, signalling potential upward price volatility and momentum.
• Moving Averages: Daily moving averages have turned mildly bullish, supporting short-term upward price movement.
• KST (Know Sure Thing): Weekly and monthly remain mildly bearish, indicating caution in momentum.
• Dow Theory: Weekly mildly bearish, monthly no trend, reflecting mixed longer-term directional cues.
• On-Balance Volume (OBV): Weekly mildly bearish, monthly no trend, showing volume patterns are not strongly supportive yet.

Overall, the technical picture is cautiously optimistic, with several indicators pointing to a nascent bullish phase. This technical improvement has been a key factor in the MarketsMOJO Mojo Score rising to 50.0 and the Mojo Grade upgrading from Sell to Hold on 2 February 2026.

Market Performance: Outperforming in the Short Term

Haleos Labs has demonstrated strong short-term price performance relative to the broader market. Over the past week, the stock has surged 8.14%, vastly outperforming the Sensex’s 0.16% gain. However, over the past month, the stock declined 4.04%, slightly better than the Sensex’s 4.78% fall. Year-to-date, the stock has posted a modest 0.76% return, outperforming the Sensex’s negative 4.17% return.

These mixed returns highlight the stock’s volatility but also its resilience relative to the benchmark. The stock’s current price of ₹1,284.70 is closer to its recent high of ₹1,680.00 than its low of ₹956.05, indicating a recovery phase.

Ownership and Market Capitalisation

The company remains majority-owned by promoters, which often provides stability in strategic direction and governance. Haleos Labs holds a Market Cap Grade of 4, indicating a mid-sized market capitalisation relative to its sector peers. This size allows for growth potential while maintaining sufficient liquidity for investors.

Conclusion: Hold Rating Reflects Balanced Outlook

The upgrade of Haleos Labs Limited’s investment rating from Sell to Hold is primarily driven by improved technical indicators and a more attractive valuation relative to peers. The company’s recent positive quarterly performance and conservative financial structure add to the cautious optimism. However, the modest long-term growth rates and mixed technical signals temper enthusiasm, justifying a Hold rather than a Buy rating at this stage.

Investors should monitor upcoming quarterly results and sector developments closely, as further improvements in profitability and sustained bullish technical trends could warrant a more positive outlook. For now, the Hold rating reflects a balanced view that recognises both the progress made and the challenges ahead for Haleos Labs Limited.

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