Hisar Spinning Mills Ltd Upgraded to Hold on Improved Technicals and Financials

Technical Trends Shift to Mildly Bullish

The primary catalyst for the rating upgrade is the marked improvement in the company’s technical outlook. Hisar Spinning Mills’ technical grade has shifted from mildly bearish to mildly bullish, signalling a positive momentum shift in market sentiment. Key technical indicators underpinning this change include a bullish Moving Average Convergence Divergence (MACD) on both weekly and monthly charts, alongside bullish Bollinger Bands on the same timeframes. These suggest strengthening upward price momentum and reduced volatility risk.

However, the Relative Strength Index (RSI) presents a mixed picture, with a bearish weekly reading and no clear monthly signal, indicating some short-term caution among traders. Daily moving averages remain mildly bearish, reflecting recent price consolidation. The Know Sure Thing (KST) oscillator is mildly bullish weekly but mildly bearish monthly, while Dow Theory assessments are mildly bullish across both weekly and monthly periods. On-Balance Volume (OBV) shows no definitive trend, suggesting volume has not decisively confirmed price moves yet.

These nuanced technical signals collectively justify the cautious upgrade to Hold, reflecting a stock that is gaining momentum but still requires confirmation for a stronger buy stance.

Financial Trend: Positive Quarterly Performance and Profit Growth

Hisar Spinning Mills has demonstrated encouraging financial trends, particularly in the third quarter of fiscal year 2025-26. The company reported its highest quarterly PBDIT at ₹2.17 crores and an operating profit margin of 19.32%, both record highs for the period. Return on Capital Employed (ROCE) for the half-year stood at an impressive 16.05%, signalling efficient capital utilisation. Meanwhile, Return on Equity (ROE) is a healthy 13.8%, underscoring strong profitability relative to shareholder equity.

Profit growth over the past year has been robust, with a 42.1% increase, outpacing the stock’s 26.66% price appreciation. This profit surge, combined with a low PEG ratio of 0.2, indicates that earnings growth is not yet fully priced in, offering potential upside for investors. However, the company’s net sales have grown at a modest compound annual growth rate (CAGR) of 10.70% over the last five years, reflecting steady but unspectacular top-line expansion.

Valuation: Attractive Metrics Amid Fair Market Pricing

Hisar Spinning Mills is currently trading at ₹67.13, which is its 52-week high, marking a 4.99% gain on the day of the rating change. The stock’s Price to Book Value ratio stands at a reasonable 0.9, suggesting it is trading near its book value and is attractively priced relative to its peers. This valuation is supported by the company’s solid ROE and improving profitability metrics, making it a fair value proposition in the garments and apparels sector.

Comparatively, the stock has outperformed the broader market indices, delivering a 26.66% return over the last year versus the BSE500’s 13.16%. Over longer horizons, the stock’s returns have been exceptional, with a five-year return of 438.33% and a ten-year return of 654.27%, dwarfing Sensex returns of 67.42% and 255.80% respectively over the same periods. This long-term outperformance highlights the company’s ability to generate shareholder value despite moderate recent sales growth.

Quality Assessment: Stable Ownership and Industry Position

The company’s quality rating remains steady, supported by promoter majority ownership which typically aligns management interests with those of shareholders. Operating in the textile segment of the garments and apparels industry, Hisar Spinning Mills benefits from sector tailwinds such as rising domestic demand and export opportunities. However, the company’s Mojo Grade remains at Hold with a score of 50.0, reflecting a balanced view of its strengths and areas requiring caution.

While the company’s financials and technicals have improved, the relatively weak long-term sales growth and mixed technical signals temper enthusiasm for a stronger rating. Investors are advised to monitor upcoming quarterly results and technical developments closely for confirmation of sustained momentum.

Market Performance and Outlook

Hisar Spinning Mills’ recent price action has been impressive, with a one-week return of 10.23% and a one-month return of 39.65%, vastly outperforming the Sensex’s 0.02% and 2.15% respectively over the same periods. Year-to-date, the stock has surged 56.85% while the Sensex has declined by 2.26%, underscoring strong relative momentum. Despite this, the stock’s technical indicators suggest some short-term caution, with daily moving averages mildly bearish and weekly RSI bearish, indicating potential volatility ahead.

Investors should weigh the company’s solid quarterly financials and attractive valuation against the mixed technical signals and moderate long-term sales growth. The Hold rating reflects this balanced outlook, recommending a wait-and-watch approach rather than aggressive accumulation at current levels.

Summary

In summary, Hisar Spinning Mills Ltd’s upgrade to a Hold rating with a Mojo Score of 50.0 is justified by a combination of improved technical trends, strong quarterly financial performance, attractive valuation metrics, and a stable quality profile. While the company’s long-term sales growth remains modest, its profitability and market-beating returns provide a solid foundation for investors seeking exposure to the garments and apparels sector. The cautious technical signals and moderate rating suggest that investors should monitor developments closely before committing additional capital.

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