Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating for ICRA Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. While the rating was assigned on 18 Nov 2025, it is important to understand how the stock stands today, as of 07 February 2026, to make informed investment decisions.
Quality Assessment
ICRA Ltd’s quality grade is classified as 'good', reflecting a stable business model and consistent operational performance. Over the past five years, the company has demonstrated moderate growth with net sales increasing at an annualised rate of 12.88% and operating profit growing at 17.88%. These figures suggest a steady, albeit unspectacular, expansion in core operations. However, recent quarterly results indicate some softness, with the profit after tax (PAT) for the December 2025 quarter falling by 6.9% compared to the previous four-quarter average, and earnings per share (EPS) hitting a low of ₹40.23. This signals some near-term challenges in maintaining profitability momentum.
Valuation Considerations
Valuation remains a critical factor in the current rating. As of 07 February 2026, ICRA Ltd is considered 'very expensive' with a price-to-book (P/B) ratio of 5.2, despite a return on equity (ROE) of 17.3%. This elevated valuation suggests that the market has priced in strong expectations for future growth, which the company has struggled to fully deliver. The stock’s price-to-earnings-growth (PEG) ratio stands at 1.7, indicating that earnings growth is not sufficiently compensating for the high valuation. Investors should be cautious, as paying a premium for a stock with flat financial trends and recent earnings softness may increase downside risk.
Financial Trend Analysis
The financial grade for ICRA Ltd is 'flat', reflecting a lack of significant improvement or deterioration in recent performance. While the company’s profits have risen by 17.7% over the past year, the stock price has declined by 6.7% during the same period. This divergence suggests that market sentiment is not fully aligned with the company’s earnings growth, possibly due to concerns about sustainability or broader sector pressures. Additionally, the stock has underperformed the BSE500 index over the last three years, one year, and three months, indicating weaker relative performance in both the long and short term.
Technical Outlook
From a technical perspective, ICRA Ltd is graded as 'bearish'. The stock has experienced consistent downward pressure, with recent price changes showing a 1-day decline of 1.6%, a 1-week drop of 6.37%, and a 3-month fall of 7.97%. This negative momentum suggests that market participants are currently less optimistic about the stock’s near-term prospects. Technical indicators often reflect investor sentiment and can influence trading behaviour, reinforcing the cautious stance implied by the 'Sell' rating.
Stock Returns and Market Performance
As of 07 February 2026, ICRA Ltd’s stock returns have been underwhelming. The stock has declined by 6.7% over the past year and has also posted negative returns across multiple shorter time frames, including a 6.19% drop over the last month and a 6.57% fall over six months. This performance contrasts with the broader market and peers, highlighting the stock’s relative weakness. Investors should weigh these returns against the company’s fundamentals and valuation to assess risk and reward.
Implications for Investors
The 'Sell' rating from MarketsMOJO suggests that investors should approach ICRA Ltd with caution. The combination of a high valuation, flat financial trends, bearish technical signals, and underperformance relative to the market indicates limited upside potential in the near term. For those holding the stock, it may be prudent to reassess portfolio allocations, while prospective investors might consider waiting for more favourable entry points or clearer signs of operational improvement.
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Company Profile and Market Capitalisation
ICRA Ltd operates within the Capital Markets sector and is classified as a small-cap company. Its market capitalisation reflects its niche positioning in the industry, which can contribute to higher volatility and sensitivity to sector-specific developments. Investors should consider the company’s size and sector dynamics when evaluating its risk profile.
Summary of Key Metrics
To summarise, as of 07 February 2026:
- Mojo Score: 37.0 (Sell grade)
- Quality Grade: Good
- Valuation Grade: Very Expensive
- Financial Grade: Flat
- Technical Grade: Bearish
- Stock Returns: Negative across multiple time frames, including -6.7% over 1 year
- Profitability: ROE at 17.3%, but recent quarterly PAT declined by 6.9%
- Valuation Multiples: P/B ratio of 5.2 and PEG ratio of 1.7
These metrics collectively underpin the current 'Sell' rating, signalling that the stock may face challenges in delivering attractive returns in the near term.
Conclusion
ICRA Ltd’s current 'Sell' rating by MarketsMOJO reflects a comprehensive assessment of its valuation, financial performance, quality, and technical outlook as of 07 February 2026. While the company maintains a good quality grade, its very expensive valuation, flat financial trends, and bearish technical signals suggest limited upside potential. Investors should carefully consider these factors and monitor future developments before making investment decisions regarding this stock.
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