Indo Rama Synthetics (India) Ltd is Rated Sell

Current Rating and Its Significance

MarketsMOJO's 'Sell' rating for Indo Rama Synthetics (India) Ltd indicates a cautious stance for investors considering this stock. This recommendation suggests that the stock is expected to underperform relative to the broader market or its sector peers in the near term. The rating was revised to 'Sell' on 31 January 2026, reflecting a reassessment of the company's prospects based on multiple parameters. It is important to note that while the rating change date is fixed, the analysis below is grounded in the most recent data available as of 02 February 2026, ensuring investors receive an up-to-date perspective.

Here’s How Indo Rama Synthetics Looks Today

As of 02 February 2026, the stock shows a Mojo Score of 45.0, which falls into the 'Sell' grade category. This score reflects a decline of 12 points from the previous 57 score when the stock was rated 'Hold'. The company's market capitalisation remains in the microcap segment, operating within the Garments & Apparels sector. The stock has experienced notable price weakness recently, with a one-day decline of 1.82%, a one-month drop of 19.96%, and a three-month fall of 43.67%. Over the past year, the stock has delivered a negative return of 3.02%, underperforming the BSE500 benchmark consistently over the last three years.

Quality Assessment

Indo Rama Synthetics currently holds an average quality grade. The company’s ability to service its debt is a significant concern, with an EBIT to Interest coverage ratio averaging only 1.74 times. This indicates limited cushion to meet interest obligations, raising questions about financial stability. Quarterly results for December 2025 further highlight challenges, with profit after tax (PAT) falling sharply by 67.7% compared to the previous four-quarter average. Operating profit to interest coverage in the same quarter was at a low 1.40 times, signalling tight operational margins and financial stress. Additionally, cash and cash equivalents stood at a low ₹8.29 crores as of the half-year mark, constraining liquidity.

Valuation Perspective

Despite the operational and financial headwinds, the valuation grade for Indo Rama Synthetics is classified as very attractive. This suggests that the stock is trading at a price level that could offer value relative to its earnings potential and asset base. However, attractive valuation alone does not offset the risks posed by weak financial trends and technical indicators. Investors should weigh the low price against the company’s ongoing challenges and sector dynamics before considering entry.

Financial Trend Analysis

The financial trend for Indo Rama Synthetics is currently flat, indicating a lack of significant improvement or deterioration in key financial metrics over recent periods. The company’s earnings and cash flow generation have not shown meaningful growth, and the recent quarterly performance points to a contraction in profitability. This stagnation, combined with weak debt servicing ability, suggests limited momentum in the company’s financial health at present.

Technical Outlook

From a technical standpoint, the stock is mildly bearish. The recent price declines and underperformance relative to benchmarks reflect negative market sentiment. The stock’s downward trajectory over the past three months and six months, with losses of 43.67% and 23.84% respectively, reinforce this bearish outlook. Technical indicators suggest caution for investors, as the stock has yet to demonstrate signs of a sustainable recovery.

Additional Market Insights

Notably, domestic mutual funds hold a negligible stake of just 0.01% in Indo Rama Synthetics. Given that mutual funds typically conduct thorough research and due diligence, their minimal exposure may indicate a lack of confidence in the company’s near-term prospects or valuation. This limited institutional interest adds another layer of caution for retail investors.

Implications for Investors

The 'Sell' rating from MarketsMOJO reflects a comprehensive evaluation of Indo Rama Synthetics’ current fundamentals, valuation, financial trends, and technical signals. For investors, this rating suggests that the stock may face continued headwinds and could underperform relative to peers and benchmarks. While the valuation appears attractive, the risks associated with weak profitability, poor debt coverage, and negative price momentum warrant a cautious approach. Investors should consider these factors carefully and monitor any developments that could alter the company’s outlook.

Summary of Key Metrics as of 02 February 2026

To summarise, Indo Rama Synthetics (India) Ltd currently exhibits the following characteristics:

• Mojo Score: 45.0 (Sell grade)
• Market Capitalisation: Microcap segment
• Quality Grade: Average
• Valuation Grade: Very Attractive
• Financial Grade: Flat
• Technical Grade: Mildly Bearish
• Debt Servicing Ratio (EBIT to Interest): 1.74 times (weak)
• Recent Quarterly PAT: ₹11.48 crores, down 67.7%
• Cash and Cash Equivalents (Half Year): ₹8.29 crores (low liquidity)
• Stock Returns: 1Y -3.02%, 3M -43.67%, 6M -23.84%
• Institutional Holding: Domestic mutual funds at 0.01%

These metrics collectively underpin the current 'Sell' rating and provide a detailed framework for investors to assess the stock’s risk and reward profile.

Looking Ahead

Investors should continue to monitor Indo Rama Synthetics’ operational performance, debt servicing capability, and market sentiment. Any improvement in profitability, cash flow generation, or technical indicators could warrant a reassessment of the rating. Until then, the 'Sell' recommendation advises prudence and suggests that investors may want to consider alternative opportunities within the Garments & Apparels sector or broader market.

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