Hazoor Multi Projects Ltd Upgraded to Sell on Technical Improvements Despite Weak Financials

Quality Assessment: Persistent Financial Weaknesses

Hazoor Multi Projects Ltd continues to grapple with significant financial headwinds. The company reported a very negative financial performance in Q2 FY25-26, with net sales declining by 15.22% year-on-year. Operating profit has contracted at an annualised rate of -22.46% over the past five years, signalling deteriorating operational efficiency. The latest quarterly profit after tax (PAT) stood at a loss of ₹9.93 crores, representing a steep fall of 189.6% compared to the previous four-quarter average.

Operating cash flow for the year is at a low of ₹-49.46 crores, while the operating profit to interest coverage ratio has dropped to -0.67 times, indicating the company’s strained ability to service its interest obligations from operating earnings. These figures underscore a continuing trend of negative results, with Hazoor Multi Projects declaring losses for eight consecutive quarters.

Despite these challenges, the company maintains a relatively strong debt servicing capacity, with a low Debt to EBITDA ratio of 0.63 times. This suggests that while profitability is under pressure, the firm’s leverage remains manageable, providing some cushion against financial distress.

Valuation: Attractive on Relative and Absolute Measures

From a valuation standpoint, Hazoor Multi Projects Ltd presents an attractive profile. The company’s return on capital employed (ROCE) stands at 7.7%, which, while modest, is supported by an enterprise value to capital employed ratio of 1.5 times. This valuation metric indicates the stock is trading at a discount relative to its peers’ historical averages, offering potential value for investors willing to look beyond short-term earnings volatility.

However, the stock’s market capitalisation grade remains low at 4, reflecting its micro-cap status and associated liquidity and volatility risks. The current share price of ₹37.12 is significantly below its 52-week high of ₹57.80, though comfortably above the 52-week low of ₹26.80. This price positioning suggests some recovery potential but also highlights the stock’s vulnerability to market swings.

Financial Trend: Continued Underperformance and Negative Growth

Hazoor Multi Projects Ltd’s financial trend remains a cause for concern. Over the last year, the stock has underperformed the broader market significantly, delivering a negative return of -34.96% compared to the BSE500’s positive 5.68% gain. Profitability has also declined sharply, with profits falling by 37% over the same period.

Longer-term returns tell a more complex story. Over three and five years, the stock has generated extraordinary cumulative returns of 398.96% and 12,481.56% respectively, vastly outperforming the Sensex’s 41.57% and 76.39% gains. Over ten years, the stock’s return of 20,603.83% dwarfs the Sensex’s 234.01%. This suggests that while recent performance has been weak, the company has delivered exceptional value over the long haul.

Institutional investors hold a significant stake of 24.67%, having increased their holdings by 1.56% in the previous quarter. This indicates a degree of confidence from sophisticated market participants despite the company’s recent struggles.

Technicals: Key Driver Behind Upgrade to Sell

The primary catalyst for the upgrade from Strong Sell to Sell is a shift in technical indicators, signalling a mild improvement in market sentiment. The technical grade has changed from bearish to mildly bearish, reflecting a less negative outlook on price momentum.

Weekly technical indicators show a mildly bullish MACD and KST, while monthly indicators remain mildly bearish. The Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal, indicating a neutral momentum. Bollinger Bands suggest sideways movement on the weekly timeframe but mildly bearish trends monthly. Moving averages on the daily chart remain mildly bearish, and Dow Theory analysis shows no definitive trend on weekly or monthly bases.

Price action today saw a slight decline of 0.51%, with the stock trading between ₹36.00 and ₹37.99, closing near ₹37.12. This range-bound behaviour aligns with the technical assessment of a mild bearish stance rather than a strong downtrend.

Comparative Market Performance and Outlook

While Hazoor Multi Projects Ltd’s recent financial results have been disappointing, the stock’s long-term performance relative to the Sensex remains impressive. The company’s 10-year return of over 20,600% far exceeds the Sensex’s 234%, highlighting its potential for investors with a long-term horizon.

However, the near-term outlook is tempered by weak quarterly earnings and negative cash flows. The downgrade in financial trend metrics and persistent losses suggest caution. The upgrade in technical grade to mildly bearish may indicate a stabilisation in price action, but it does not yet signal a definitive recovery.

Investors should weigh the company’s attractive valuation and manageable debt levels against its ongoing operational challenges and recent underperformance. The increased institutional interest may provide some support, but the stock remains a high-risk proposition within the realty sector.

Conclusion: Balanced View on Hazoor Multi Projects Ltd

Hazoor Multi Projects Ltd’s upgrade from Strong Sell to Sell reflects a subtle shift in technical momentum rather than a fundamental turnaround. The company’s financial health remains fragile, with continued losses and declining sales overshadowing valuation advantages and debt management strengths.

For investors, the stock offers a mixed picture: long-term outperformance and attractive valuation contrast with short-term financial weakness and market underperformance. The technical improvement may provide a platform for price consolidation, but a sustained recovery will depend on a return to profitability and revenue growth.

Given these factors, the Sell rating advises caution, suggesting that investors monitor developments closely and consider alternative opportunities until clearer signs of financial improvement emerge.

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