MarketsMOJO Upgrades TVS Supply Chain Solutions Ltd to Hold on Technical and Financial Improvements

Technical Indicators Show Mild Bullish Momentum

The primary catalyst for the upgrade lies in the technical trend, which has shifted from a sideways pattern to a mildly bullish stance. Weekly technical indicators such as the Moving Average Convergence Divergence (MACD) and Bollinger Bands have turned mildly bullish, suggesting a potential upward momentum in the near term. The On-Balance Volume (OBV) indicator also supports this view, showing bullish signals on both weekly and monthly charts, indicating accumulation by investors.

However, some caution remains as daily moving averages are mildly bearish and the KST (Know Sure Thing) indicator on a weekly basis remains bearish. Monthly Bollinger Bands also show a mildly bearish trend, reflecting some volatility and uncertainty in the longer-term technical outlook. The Dow Theory signals are mixed, with no clear trend on the weekly chart but a mildly bullish indication monthly. Overall, the technical picture is improving but not yet decisively positive.

Valuation Remains Attractive Despite Market Underperformance

From a valuation perspective, TVS Supply Chain Solutions Ltd is trading attractively relative to its peers and historical averages. The company’s Return on Capital Employed (ROCE) stands at 4.3%, paired with an Enterprise Value to Capital Employed ratio of 2, which suggests the stock is undervalued compared to sector benchmarks. This valuation discount is notable given the company’s recent financial performance.

Despite this, the stock price has declined by 6.48% over the past year, underperforming the broader BSE500 index which has delivered 14.27% returns in the same period. This divergence between valuation and price performance highlights a potential opportunity for investors willing to look beyond short-term market sentiment.

Financial Trends Reflect Strong Recent Growth but Lingering Concerns

Financially, TVS Supply Chain Solutions Ltd has demonstrated a marked improvement in recent quarters. The company reported positive results for three consecutive quarters, with the latest six-month Profit After Tax (PAT) reaching ₹32.75 crores, representing an extraordinary growth rate of 313.74%. The half-year Return on Capital Employed (ROCE) peaked at 8.72%, signalling enhanced operational efficiency and capital utilisation.

Additionally, the company’s debt-equity ratio has improved to a relatively low 1.14 times, indicating a more manageable leverage position. However, long-term fundamentals remain weak, with an average ROCE of 4.13% and modest net sales growth of 6.63% annually over the past five years. The company’s ability to service debt is also a concern, with an average EBIT to interest coverage ratio of just 0.89, suggesting vulnerability to interest rate fluctuations and financial stress.

Quality Assessment Highlights Mixed Signals

Quality metrics for TVS Supply Chain Solutions Ltd present a mixed picture. While recent financial performance and operational improvements are encouraging, the company’s long-term growth trajectory and capital efficiency remain subdued. A notable risk factor is the high proportion of promoter shares pledged, currently at 31.87%, which has increased by 2.64% over the last quarter. This elevated pledge level can exert downward pressure on the stock price during market downturns, adding to investor caution.

Moreover, the company’s market capitalisation grade stands at a modest 3, reflecting its small-cap status and limited liquidity compared to larger peers. The overall Mojo Score is 50.0, with the Mojo Grade upgraded from Sell to Hold on 18 February 2026, signalling a cautious endorsement rather than a full conviction buy recommendation.

Stock Price and Market Performance Context

TVS Supply Chain Solutions Ltd’s current stock price is ₹123.45, down 2.64% on the day, with a 52-week high of ₹147.00 and a low of ₹92.40. The stock has shown resilience in the short term, delivering a 1-month return of 19.56% compared to the Sensex’s 0.20%, and a year-to-date return of 10.57% versus the Sensex’s negative 1.74%. However, over the last year, the stock has underperformed the broader market, reflecting lingering investor scepticism despite improving fundamentals.

Outlook and Investor Considerations

In summary, the upgrade of TVS Supply Chain Solutions Ltd’s rating to Hold reflects a balanced assessment of improving technical signals and recent financial gains against persistent long-term challenges and valuation risks. Investors should weigh the company’s strong recent profit growth and attractive valuation against its weak debt servicing capacity, modest long-term growth, and elevated promoter pledge levels.

While the technical indicators suggest a mild bullish momentum that could support a price recovery, the stock’s underperformance relative to the broader market and sector peers warrants caution. The Hold rating implies that investors may consider maintaining existing positions but should await clearer signs of sustained improvement before increasing exposure.

Given the company’s current market cap grade of 3 and a Mojo Score of 50.0, TVS Supply Chain Solutions Ltd remains a mid-tier small-cap stock with potential upside tempered by structural risks. Market participants are advised to monitor upcoming quarterly results and technical developments closely to reassess the stock’s trajectory.

Comparative Performance Versus Sensex

Over the short term, TVS Supply Chain Solutions Ltd has outperformed the Sensex, with a 1-week return of 0.41% against the Sensex’s -0.59%, and a 1-month return of 19.56% compared to 0.20% for the benchmark. Year-to-date, the stock has gained 10.57%, while the Sensex declined by 1.74%. However, over the last 12 months, the stock’s return of -6.48% contrasts sharply with the Sensex’s 10.22% gain, underscoring the stock’s volatility and mixed investor sentiment.

Long-Term Growth and Profitability Metrics

Despite recent profit surges, the company’s long-term fundamentals remain subdued. The average Return on Capital Employed (ROCE) over the years is 4.13%, which is modest for the transport services sector. Net sales have grown at an annualised rate of 6.63% over the past five years, indicating slow but steady expansion. The company’s PEG ratio stands at zero, reflecting the disconnect between price performance and earnings growth.

Debt and Promoter Pledge Risks

Debt servicing remains a concern, with an average EBIT to interest coverage ratio of 0.89, signalling limited cushion to meet interest obligations. The promoter share pledge ratio at 31.87% is relatively high and has increased recently, which could exert additional downward pressure on the stock price in adverse market conditions.

Conclusion

TVS Supply Chain Solutions Ltd’s upgrade to Hold is a reflection of improving technical trends and recent financial performance, balanced against ongoing fundamental challenges and market risks. Investors should adopt a measured approach, recognising the company’s potential for recovery while remaining vigilant to the risks posed by debt levels and promoter pledges. The stock’s attractive valuation relative to peers offers a compelling entry point for risk-tolerant investors, but a cautious stance is warranted until more consistent long-term growth and debt metrics improve.

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