Hexa Tradex Ltd Downgraded to Strong Sell Amid Technical Weakness and Flat Financials

Quality Assessment: Flat Financial Performance and Risk Factors

Hexa Tradex’s recent quarterly results for Q2 FY25-26 reveal a flat financial performance, with no significant growth in revenues or profitability. Despite a remarkable 209.9% rise in profits over the past year, the company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) remain negative, underscoring operational challenges. This negative EBITDA status raises concerns about the company’s ability to generate sustainable cash flows, which is a critical quality metric for NBFCs.

Moreover, the company’s low average Debt to Equity ratio of 0.07 times indicates a conservative capital structure, which is positive from a risk perspective. However, this strength is overshadowed by the flat top-line growth and the negative EBITDA, which collectively weigh down the overall quality grade.

Investor confidence is further dampened by the minimal stake held by domestic mutual funds, which own only 0.1% of Hexa Tradex. Given that mutual funds typically conduct thorough due diligence, their limited exposure suggests reservations about the company’s valuation or business prospects.

Valuation: Risky Trading Levels Amid Underperformance

From a valuation standpoint, Hexa Tradex is trading at levels considered risky relative to its historical averages. The stock’s 52-week high stands at ₹242.00, while the current price of ₹160.00 represents a significant discount but also reflects market scepticism. Over the last year, the stock has delivered a negative return of -32.35%, starkly underperforming the Sensex’s 8.01% gain during the same period.

Longer-term returns also paint a mixed picture. While the stock has generated an impressive 932.26% return over the past decade, this is largely driven by earlier performance, as recent three-year returns of 1.94% lag behind the Sensex’s 35.12% gain. This underperformance relative to benchmark indices and sector peers has contributed to the downgrade in valuation grade, signalling that the stock may be overvalued given its current fundamentals and market sentiment.

Financial Trend: Stagnation Despite Profit Growth

While Hexa Tradex has seen a notable increase in profits over the past year, the overall financial trend remains flat, especially when considering quarterly results. The lack of revenue growth and persistent negative EBITDA highlight operational inefficiencies and challenges in scaling the business sustainably. This stagnation is a key factor in the downgrade, as investors typically favour companies demonstrating consistent upward financial momentum.

Furthermore, the stock’s returns relative to the Sensex reveal a troubling trend. Year-to-date, Hexa Tradex has declined by 2.26%, whereas the Sensex has fallen by 3.89%, indicating marginal outperformance in the short term. However, over the one-year horizon, the stock’s -32.35% return is significantly worse than the Sensex’s positive 8.01%, signalling deteriorating investor sentiment and financial health.

Technical Analysis: Shift to Bearish Momentum

The most significant trigger for the downgrade to Strong Sell is the deterioration in technical indicators. The technical grade shifted from mildly bearish to outright bearish, reflecting a negative outlook on price momentum and trend sustainability.

Key technical metrics include:

• MACD: Weekly readings remain mildly bullish, but monthly MACD is bearish, indicating weakening longer-term momentum.
• RSI: Weekly RSI shows no clear signal, while monthly RSI is bullish, suggesting some underlying strength but insufficient to offset other bearish signals.
• Bollinger Bands: Both weekly and monthly bands are bearish, signalling increased volatility and downward pressure on price.
• Moving Averages: Daily moving averages are bearish, confirming short-term downtrend.
• KST (Know Sure Thing): Both weekly and monthly KST indicators are bearish, reinforcing the negative momentum across timeframes.
• Dow Theory: Weekly trend is mildly bearish, while monthly trend shows no clear direction, indicating uncertainty but a bias towards weakness.
• On-Balance Volume (OBV): Mildly bearish on both weekly and monthly charts, suggesting selling pressure outweighs buying interest.

These technical signals collectively point to a bearish outlook, justifying the downgrade in technical grade and contributing heavily to the overall Strong Sell rating.

Market Context and Price Action

On 22 Jan 2026, Hexa Tradex closed at ₹160.00, up 2.73% from the previous close of ₹155.75. The intraday range was ₹160.00 to ₹165.95, indicating some buying interest. However, the stock remains well below its 52-week high of ₹242.00 and only marginally above its 52-week low of ₹149.75. This price action reflects a lack of strong conviction among investors, consistent with the bearish technical backdrop.

Comparatively, the broader market indices such as the Sensex have shown more resilience, further highlighting Hexa Tradex’s relative underperformance and risk profile.

Summary and Outlook

Hexa Tradex Ltd’s downgrade to a Strong Sell rating by MarketsMOJO reflects a convergence of negative factors across quality, valuation, financial trend, and technical parameters. The company’s flat quarterly financials, negative EBITDA, and limited institutional interest raise concerns about its fundamental strength. Valuation metrics suggest the stock is trading at risky levels, especially given its underperformance relative to benchmark indices over the past year and three years.

Technically, the shift to a bearish trend across multiple indicators confirms weakening price momentum and increased selling pressure. While some monthly indicators like RSI show mild bullishness, these are insufficient to offset the broader negative signals.

Investors should exercise caution with Hexa Tradex, considering the elevated risk profile and lack of clear catalysts for near-term improvement. The company’s low debt level is a positive, but it does not currently compensate for operational stagnation and technical weakness.

For those seeking exposure to the NBFC sector or trading industry, exploring higher-rated alternatives with stronger financial trends and technical momentum may be prudent.

Unlock special upgrade rates for a limited period. Start Saving Now →