Manoj Vaibhav Gems N Jewellers Ltd Upgraded to Hold on Technical Improvement and Valuation Appeal

Quality Assessment: Mixed Signals Amidst Financial Strength

Manoj Vaibhav’s quality rating remains cautious, with a Mojo Score of 51.0 and a Mojo Grade of Hold, signalling moderate confidence in the company’s fundamentals. The firm reported a robust quarter in Q2 FY25-26, with net sales reaching ₹755.82 crores, marking a 26.3% increase compared to the previous four-quarter average. Operating profit before depreciation, interest and taxes (PBDIT) also hit a quarterly high of ₹55.43 crores, while the operating profit to interest ratio surged to 5.90 times, indicating strong coverage of interest expenses.

Return on Capital Employed (ROCE) stands at a healthy 14.4%, underscoring efficient utilisation of capital. However, the company’s long-term growth trajectory remains subdued, with net sales growing at an annualised rate of 8.42% and operating profit at 5.75% over the past five years. This slower pace of expansion tempers enthusiasm, especially given the stock’s underperformance relative to benchmarks.

Valuation: Attractive Discounts Amid Sector Peers

Valuation metrics have played a pivotal role in the upgrade. Manoj Vaibhav is trading at an enterprise value to capital employed ratio of just 1.1, which is considered very attractive compared to its peers’ historical averages. The company’s price-to-earnings growth (PEG) ratio is a low 0.5, signalling that the stock is undervalued relative to its earnings growth potential. This valuation discount is particularly notable given the company’s improving profitability and operational metrics.

Despite these positives, the stock price has struggled, delivering a negative return of -34.5% over the last year, significantly lagging the Sensex’s 7.85% gain over the same period. This divergence suggests that the market has yet to fully price in the company’s improving fundamentals, offering a potential opportunity for investors willing to look beyond short-term price movements.

Financial Trend: Recent Quarter Shows Encouraging Momentum

The financial trend for Manoj Vaibhav has improved, driven by the strong quarterly results in September 2025. The company’s net sales growth of 26.3% in Q2 FY25-26 contrasts favourably with its longer-term growth rates, indicating a possible acceleration in business momentum. Operating profit margins have also expanded, contributing to the highest quarterly PBDIT recorded.

However, the longer-term financial trend remains less encouraging. Over the past five years, growth in net sales and operating profit has been modest, and the stock’s returns have underperformed key indices such as the BSE500 over one and three-year horizons. This underperformance reflects challenges in sustaining growth and investor confidence, which continue to weigh on the company’s outlook.

Technical Analysis: Shift from Bearish to Mildly Bearish Trend

The most significant catalyst for the rating upgrade was the improvement in technical indicators. Manoj Vaibhav’s technical grade shifted from bearish to mildly bearish, reflecting a stabilisation in price momentum. Weekly MACD readings have turned mildly bullish, supported by a mildly bullish KST (Know Sure Thing) indicator on the weekly chart. Meanwhile, the Relative Strength Index (RSI) remains neutral with no clear signal on both weekly and monthly timeframes.

Bollinger Bands on the weekly chart indicate a sideways trend, while the monthly bands remain mildly bearish, suggesting some caution in the medium term. Daily moving averages continue to show bearish signals, but the weekly Dow Theory assessment has improved to mildly bearish from a more negative stance previously. On-balance volume (OBV) shows no clear trend, indicating a lack of strong buying or selling pressure.

Price action has been relatively stable, with the current price at ₹181.75, unchanged from the previous close. The stock’s 52-week range is ₹168.00 to ₹316.00, highlighting significant volatility and room for recovery should positive momentum build further.

Market Position and Institutional Interest

Despite Manoj Vaibhav’s size and sector presence, domestic mutual funds hold no stake in the company. This absence of institutional ownership may reflect concerns about valuation or business prospects, or a lack of in-depth research coverage. Institutional interest often acts as a catalyst for stock price appreciation, so this remains a notable gap in the company’s market profile.

Comparatively, the stock has underperformed the Sensex and BSE500 indices over multiple timeframes, including one year and three years, underscoring the challenges faced by investors in realising gains. The company’s sector, Gems, Jewellery and Watches, remains competitive, and Manoj Vaibhav’s valuation discount may attract value-oriented investors seeking turnaround potential.

Conclusion: Hold Rating Reflects Balanced Outlook

The upgrade of Manoj Vaibhav Gems N Jewellers Ltd from Sell to Hold is a reflection of improving technical signals and an attractive valuation profile, supported by recent positive quarterly financial results. While the company’s long-term growth and stock price performance have been disappointing, the current fundamentals suggest a stabilisation phase that warrants cautious optimism.

Investors should weigh the company’s strong operating profit growth and efficient capital utilisation against its subdued long-term sales growth and lack of institutional backing. The Hold rating indicates that while the stock is no longer a clear sell, it has yet to demonstrate the consistent momentum and growth required for a Buy recommendation.

Market participants will be watching Manoj Vaibhav’s upcoming quarters closely to see if the positive trends in profitability and technicals can be sustained and translated into improved shareholder returns.

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