Current Rating and Its Significance
MarketsMOJO’s 'Strong Sell' rating for National Peroxide Ltd indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its peers. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal and risk profile.
Quality Assessment
As of 24 December 2025, National Peroxide Ltd’s quality grade is below average. The company has demonstrated weak long-term fundamental strength, with a concerning compound annual growth rate (CAGR) of -135.58% in operating profits over the past five years. This steep decline highlights significant operational challenges and diminishing profitability. Additionally, the company’s ability to service its debt is notably poor, with an average EBIT to interest coverage ratio of just 0.14, indicating a strained capacity to meet interest obligations. The return on equity (ROE) averages a mere 1.90%, reflecting low profitability relative to shareholders’ funds. These quality metrics suggest that the company is struggling to generate sustainable earnings and maintain financial health.
Valuation Perspective
The valuation grade for National Peroxide Ltd is classified as risky. The stock is trading at valuations that are unfavourable compared to its historical averages, signalling potential overvaluation or market scepticism. This is compounded by the company’s negative operating profits, which raise concerns about the sustainability of earnings and cash flows. Investors should be wary of the elevated risk associated with the stock’s current price levels, as the fundamentals do not support a premium valuation.
Financial Trend Analysis
The financial trend for National Peroxide Ltd is flat, indicating stagnation rather than growth. The latest six-month performance shows a significant decline in profitability, with the profit after tax (PAT) at ₹1.28 crore, representing a sharp contraction of -77.78%. Moreover, non-operating income accounts for 263.49% of profit before tax (PBT), suggesting that core business operations are weak and that earnings are being supplemented by non-recurring or ancillary income sources. Over the past year, the stock has delivered a negative return of -42.15%, while profits have fallen by -113%, underscoring the deteriorating financial health and poor earnings momentum.
Technical Outlook
From a technical standpoint, the stock is graded bearish. Recent price movements reflect a downward trend, with the stock declining by 10.90% over the past month and 19.67% over three months. The six-month and year-to-date (YTD) returns are also deeply negative at -31.64% and -39.64% respectively. This bearish technical profile aligns with the weak fundamentals and valuation concerns, signalling continued pressure on the stock price in the near term.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Performance Relative to Market Benchmarks
National Peroxide Ltd’s stock performance has lagged behind key market indices such as the BSE500 over multiple time frames. The stock’s one-year return of -42.15% starkly contrasts with broader market gains, highlighting its underperformance. This trend extends to the three-year and three-month periods, where the stock has consistently failed to keep pace with sector and market averages. Such persistent underperformance is a critical consideration for investors seeking stable or growing returns.
Recent Financial Results
The company’s recent financial results further reinforce the cautious outlook. The flat results reported in September 2025, with a PAT of ₹1.28 crore declining by -77.78%, indicate ongoing operational difficulties. The disproportionate contribution of non-operating income to profit before tax suggests that core business activities are not generating sufficient earnings, raising questions about the sustainability of profitability.
Implications for Investors
For investors, the 'Strong Sell' rating serves as a warning signal. It suggests that the stock is expected to continue facing headwinds due to weak fundamentals, risky valuation, stagnant financial trends, and bearish technical indicators. Investors should carefully consider these factors before initiating or maintaining positions in National Peroxide Ltd. The current environment points to elevated risk and limited upside potential, favouring a cautious or defensive investment approach.
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Summary
In summary, National Peroxide Ltd’s current 'Strong Sell' rating by MarketsMOJO reflects a comprehensive assessment of its weak quality metrics, risky valuation, flat financial trends, and bearish technical outlook. As of 24 December 2025, the company continues to face significant challenges that have impacted its profitability and stock performance. Investors are advised to approach this stock with caution, recognising the elevated risks and limited prospects for near-term recovery.
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