Nahar Spinning Mills Ltd Upgraded to Hold on Improved Technicals and Valuation

Technical Trends Shift to Mildly Bearish

The primary catalyst for the upgrade lies in the technical assessment, where the stock’s trend has shifted from a bearish stance to mildly bearish. While key momentum indicators such as the MACD remain bearish on both weekly and monthly charts, other metrics suggest a tempering of downward pressure. The Relative Strength Index (RSI) currently shows no clear signal, indicating a neutral momentum phase.

Bollinger Bands analysis reveals a mildly bearish outlook on weekly and monthly timeframes, but the daily moving averages also reflect a similar mildly bearish stance, suggesting that the stock is stabilising after previous declines. The KST indicator remains bearish, yet the Dow Theory signals a mildly bearish trend weekly and no definitive trend monthly, highlighting a market in transition.

Notably, the On-Balance Volume (OBV) indicator has turned mildly bullish on both weekly and monthly charts, signalling that buying interest is gradually increasing despite the overall cautious technical environment. This subtle shift in technical momentum has been instrumental in the upgrade decision.

Valuation Remains Attractive Despite Mixed Returns

From a valuation perspective, Nahar Spinning Mills Ltd presents a compelling case. The company’s Return on Capital Employed (ROCE) stands at 4.1%, which, while modest, is supported by a very attractive Enterprise Value to Capital Employed ratio of 0.6. This valuation metric indicates that the stock is trading at a discount relative to its peers’ historical averages, offering potential upside for value-oriented investors.

Despite the stock’s underperformance over the past year with a return of -19.66%, it has outpaced the Sensex’s 6.66% gain over the same period in terms of profit growth, with profits rising by an impressive 261.4%. The PEG ratio of 0.1 further underscores the undervaluation relative to earnings growth, suggesting that the market has yet to fully price in the company’s improving fundamentals.

Financial Trend Shows Positive Momentum Amid Debt Concerns

Financially, Nahar Spinning has demonstrated encouraging trends, particularly in recent quarters. The company reported positive results for three consecutive quarters, with the latest nine-month PAT reaching ₹35.04 crores, reflecting a staggering growth rate of 493.47%. Operating profit has grown at an annualised rate of 39.33%, signalling robust operational improvements.

However, the company’s ability to service debt remains a concern. The Debt to EBITDA ratio stands at a high 4.64 times, indicating elevated leverage and potential strain on cash flows. This high debt burden tempers the otherwise positive financial momentum and warrants caution among investors.

Long-term returns have been below par, with the stock generating -19.66% over the past year and underperforming the BSE500 index over one, three years, and three months. Despite this, the five-year return of 127.32% significantly outpaces the Sensex’s 65.60%, highlighting periods of strong growth in the company’s history.

Quality Assessment Reflects Mixed Signals

The overall quality of Nahar Spinning Mills Ltd remains moderate, as reflected in its Mojo Grade upgrade from Sell to Hold. The company benefits from promoter majority ownership, which often aligns management interests with shareholders. Yet, the relatively low ROCE of 4.1% and the high leverage ratio indicate operational and financial risks that prevent a more bullish rating.

Technically, the stock’s current price of ₹187.20 is closer to its 52-week low of ₹150.00 than its high of ₹311.00, suggesting limited upside from recent peaks. The day’s trading range between ₹183.15 and ₹189.90 with a 1.41% day change reflects moderate volatility but no decisive breakout.

Contextualising Performance Against Benchmarks

When compared to broader market indices, Nahar Spinning’s performance presents a mixed picture. Over the last ten years, the stock has delivered an 84.07% return, lagging behind the Sensex’s 244.38% gain. However, the company’s five-year return of 127.32% comfortably exceeds the Sensex’s 65.60%, indicating periods of strong growth that investors may find encouraging.

Shorter-term returns have been disappointing, with the stock falling 4.95% over the past month versus the Sensex’s 2.27% decline, and a year-to-date loss of 2.12% compared to the Sensex’s 1.65% drop. This underperformance is partly offset by the company’s strong profit growth and improving technical signals, which may signal a potential turnaround.

Investors should weigh these factors carefully, considering the company’s improving fundamentals against its historical volatility and debt levels.

Outlook and Investment Implications

The upgrade to Hold reflects a balanced view of Nahar Spinning Mills Ltd’s prospects. The technical indicators suggest the worst of the bearish trend may be easing, while valuation metrics point to an undervalued stock with significant profit growth potential. However, the company’s high leverage and below-par recent returns warrant caution.

For investors, this rating implies a wait-and-watch approach rather than an outright buy or sell. The stock may appeal to those with a higher risk tolerance seeking value opportunities in the garments and apparels sector, particularly given the company’s positive quarterly financial performance and improving technical backdrop.

Continued monitoring of debt servicing capacity and market momentum will be crucial in determining whether the stock can sustain its recovery and deliver long-term shareholder value.

Summary of Ratings and Scores

Nahar Spinning Mills Ltd’s current Mojo Score stands at 51.0, upgraded from a previous Sell grade to Hold as of 04 Feb 2026. The Market Cap Grade remains at 4, reflecting a mid-sized market capitalisation. Technical grades have improved from bearish to mildly bearish, while financial trends show strong profit growth but elevated debt levels. The overall quality assessment remains cautious but improved, justifying the Hold rating.

Stock Snapshot

Current Price: ₹187.20
Previous Close: ₹184.60
52-Week High: ₹311.00
52-Week Low: ₹150.00
Day’s Range: ₹183.15 - ₹189.90
Industry: Textile
Sector: Garments & Apparels
Majority Shareholders: Promoters

Investment Grade Change Date

The upgrade was officially recorded on 04 Feb 2026, with news generated on 05 Feb 2026, signalling a timely reassessment of the stock’s prospects by market analysts.

Conclusion

Nahar Spinning Mills Ltd’s upgrade to Hold is a reflection of improving technical signals and attractive valuation metrics amid a backdrop of strong profit growth and persistent debt challenges. Investors should consider this rating as an indication of stabilising fundamentals with cautious optimism, balancing the company’s growth potential against its financial risks.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →