Quality Assessment: A Mixed Picture
Hexa Tradex operates within the NBFC sector, a space characterised by regulatory scrutiny and market volatility. The company’s quality grade remains under pressure, with a Mojo Score of 31.0 and a current Mojo Grade of Sell, improved from a previous Strong Sell. This upgrade, however, does not signify a fundamental turnaround in business quality. The company’s financials for Q2 FY25-26 were largely flat, signalling stagnation rather than growth. Moreover, the firm continues to report a negative EBITDA, underscoring operational challenges that weigh heavily on its quality assessment.
Despite these concerns, Hexa Tradex maintains a low average Debt to Equity ratio of 0.07 times, which is favourable in the NBFC sector where leverage often poses significant risk. This conservative capital structure provides some cushion against financial distress, but it has not yet translated into improved profitability or cash flow generation.
Valuation: Risky and Below Historical Averages
The valuation of Hexa Tradex remains a key concern for investors. The stock is trading at levels considered risky relative to its historical averages. Over the past year, the stock has delivered a negative return of -26.58%, significantly underperforming the Sensex, which gained 8.47% over the same period. This underperformance extends to longer time horizons as well, with the stock returning 8.85% over three years compared to the Sensex’s 39.07%, and 241.36% over five years versus the Sensex’s 70.43%. While the five- and ten-year returns (896.74%) are impressive, recent trends indicate a loss of momentum.
Domestic mutual funds hold a mere 0.1% stake in Hexa Tradex, a telling sign given their capacity for in-depth research and selective investment. This minimal exposure suggests a lack of confidence in the company’s valuation and growth prospects at current price levels.
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Financial Trend: Flat Performance Amid Profit Growth
Hexa Tradex’s recent quarterly results have been flat, with no significant improvement in revenue or earnings in Q2 FY25-26. This stagnation is a critical factor in the cautious stance on the stock. However, there is a silver lining in the form of a 209.9% rise in profits over the past year, which contrasts with the negative stock return. This divergence suggests that while the company’s earnings have improved, the market remains unconvinced, possibly due to concerns over sustainability and broader sector risks.
The company’s low debt levels provide some financial stability, but the negative EBITDA and flat top-line growth limit the potential for a positive financial trend upgrade. Investors should note that the stock’s underperformance relative to the BSE500 index over one and three years further emphasises the challenges in translating profit growth into shareholder returns.
Technical Analysis: Key Driver of Upgrade
The primary catalyst for the upgrade from Strong Sell to Sell is the improvement in technical indicators. The technical grade has shifted from bearish to mildly bearish, reflecting a subtle but meaningful change in market sentiment. Key technical signals include:
- MACD: Weekly readings have turned mildly bullish, although monthly indicators remain bearish, indicating short-term momentum improvement.
- RSI: The weekly RSI shows no clear signal, but the monthly RSI is bullish, suggesting potential for upward price movement over the medium term.
- Bollinger Bands: Both weekly and monthly bands remain mildly bearish, indicating continued volatility and caution.
- Moving Averages: Daily averages are mildly bearish, reflecting recent price weakness but with signs of stabilisation.
- KST and OBV: Both weekly and monthly readings remain bearish or mildly bearish, signalling that volume and momentum trends have yet to fully confirm a turnaround.
- Dow Theory: Weekly signals are mildly bullish, while monthly trends show no clear direction, highlighting mixed technical signals.
On 19 January 2026, Hexa Tradex closed at ₹167.95, up 1.24% from the previous close of ₹165.90. The stock’s 52-week range is ₹149.75 to ₹242.00, indicating it remains well below its peak levels. Despite this, the recent weekly and monthly returns outperform the Sensex, with a 1-week return of 2.66% versus Sensex’s -0.01%, and a year-to-date return of 2.60% compared to Sensex’s -1.94%. These technical improvements have been instrumental in the rating upgrade.
Balancing Risks and Opportunities
While the technical indicators provide a reason for cautious optimism, the fundamental challenges remain significant. The flat financial performance, negative EBITDA, and risky valuation metrics suggest that Hexa Tradex is not yet out of the woods. The limited interest from domestic mutual funds further underscores the market’s scepticism.
Investors should weigh the improved technical signals against the company’s operational and financial hurdles. The low debt ratio is a positive factor, but it has not yet translated into consistent earnings growth or stock price appreciation. The stock’s long-term underperformance relative to benchmarks like the Sensex and BSE500 also warrants careful consideration.
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Conclusion: A Cautious Upgrade Reflecting Technical Momentum
The upgrade of Hexa Tradex Ltd’s investment rating from Strong Sell to Sell reflects a nuanced assessment by MarketsMOJO analysts. While the company’s fundamental quality and financial trends remain under pressure, the improvement in technical indicators has prompted a more positive outlook on near-term price action. Investors should remain cautious given the flat financial results, negative EBITDA, and risky valuation, but may consider the stock’s low leverage and recent technical momentum as factors that could support a recovery if operational performance improves.
Overall, Hexa Tradex remains a speculative investment within the NBFC sector, with a current Mojo Score of 31.0 and a Market Cap Grade of 4. The stock’s recent price action and technical signals warrant close monitoring, but fundamental challenges suggest that a full turnaround is yet to be realised.
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