MarketsMOJO Upgrades Rhetan TMT Ltd from Sell to Hold on Improved Technicals and Financials

Technical Trends Signal Renewed Optimism

The primary catalyst for the upgrade was a marked improvement in the technical grade, which shifted from mildly bullish to bullish. Daily moving averages have turned decisively bullish, supporting a positive near-term price momentum. Weekly and monthly Bollinger Bands also indicate a bullish to mildly bullish stance, suggesting the stock is trading with upward momentum and volatility conducive to gains.

However, some technical indicators remain mixed. The MACD on both weekly and monthly charts remains mildly bearish, and the KST (Know Sure Thing) indicator on the weekly chart is also mildly bearish, signalling some caution. The Relative Strength Index (RSI) on weekly and monthly timeframes shows no clear signal, indicating the stock is neither overbought nor oversold at present.

Supporting the bullish case, Dow Theory trends on both weekly and monthly charts are bullish, and the On-Balance Volume (OBV) indicator is bullish on the monthly scale, suggesting accumulation by investors. Overall, the technical picture has improved sufficiently to warrant a more positive outlook.

Robust Quarterly Financial Performance

Rhetan TMT Ltd delivered its highest quarterly earnings in Q3 FY25-26, with PBDIT reaching ₹2.38 crores, PBT (excluding other income) at ₹1.91 crores, and PAT at ₹4.45 crores. These figures represent a significant improvement over previous quarters and demonstrate the company’s ability to generate profits amid challenging market conditions.

This strong financial showing has helped underpin the upgrade to a Hold rating, as it reflects operational efficiency and profitability improvements. The company’s positive results in December 2025 have been a key factor in restoring investor confidence.

Institutional Investor Participation Increases

Another important factor supporting the rating upgrade is the increased participation by institutional investors. Their stake in Rhetan TMT Ltd rose by 0.63% over the previous quarter, signalling growing confidence from investors with deeper analytical resources and longer-term perspectives. Institutional ownership is often viewed as a stabilising influence and a positive endorsement of the company’s fundamentals.

Long-Term Returns Outperform Benchmarks

Rhetan TMT Ltd has delivered impressive returns over multiple time horizons, significantly outpacing the Sensex and BSE500 indices. The stock generated an 82.88% return over the past year compared to the Sensex’s 9.35%, and a remarkable 179.49% over three years versus the Sensex’s 36.45%. Year-to-date, the stock is up 7.15%, while the Sensex has declined by 2.82%.

This market-beating performance highlights the company’s ability to create shareholder value despite sectoral headwinds. The stock’s current price of ₹26.06 is close to its 52-week high of ₹27.74, reflecting sustained investor interest.

Valuation Remains a Concern

Despite the positive momentum, valuation metrics suggest caution. The company’s Return on Capital Employed (ROCE) stands at a low 0.4%, while the average Return on Equity (ROE) over recent years is 5.57%, indicating modest profitability relative to shareholder funds.

Moreover, the enterprise value to capital employed ratio is elevated at 15.3, signalling that the stock is expensive relative to the capital it employs. The PEG ratio, which compares price/earnings growth, is a high 8, reflecting that the stock’s price growth has outpaced earnings growth substantially. Profits have risen by 28% over the past year, which, while positive, does not fully justify the steep valuation.

Additionally, the company’s net sales have declined at a compound annual growth rate (CAGR) of -8.10% over the last five years, highlighting weak long-term fundamental strength. This underlines the need for investors to balance optimism with prudence.

Technical and Fundamental Factors Combined to Drive Upgrade

The upgrade from Sell to Hold by MarketsMOJO on 20 Feb 2026 reflects a nuanced assessment across four key parameters:

• Quality: The company’s financial quality has improved with record quarterly profits, but long-term sales decline and modest ROE temper enthusiasm.
• Valuation: Valuation remains stretched, with high EV/Capital Employed and PEG ratios indicating the stock is expensive relative to earnings growth.
• Financial Trend: Positive quarterly earnings and increasing institutional ownership signal improving financial health and investor confidence.
• Technicals: A shift to bullish technical indicators, including daily moving averages and Dow Theory trends, supports a more optimistic near-term outlook.

Overall, the stock’s Mojo Score stands at 50.0 with a Mojo Grade of Hold, upgraded from Sell. The Market Cap Grade is 3, reflecting its small-cap status within the Iron & Steel Products sector.

Investor Takeaway

For investors, Rhetan TMT Ltd presents a mixed but cautiously optimistic picture. The recent upgrade to Hold reflects improved technical momentum and strong quarterly earnings, supported by growing institutional interest. The stock’s impressive long-term returns relative to the Sensex and sector peers add to its appeal.

However, the company’s stretched valuation and weak long-term sales growth warrant careful monitoring. Investors should weigh the potential for continued price appreciation against the risks posed by high valuation multiples and modest profitability metrics.

In summary, Rhetan TMT Ltd is positioned as a stock with improving fundamentals and technicals but remains a Hold rather than a Buy, pending further evidence of sustained growth and valuation rationalisation.

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