Current Rating and Its Significance
MarketsMOJO’s Strong Sell rating for National Peroxide Ltd indicates a cautious stance for investors, suggesting 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. The Strong Sell grade, reflected in a Mojo Score of 17.0, signals significant concerns about the company’s operational and financial health, as well as its market performance.
Quality Assessment: Below Average Fundamentals
As of 06 February 2026, National Peroxide Ltd’s quality grade remains 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 negative growth trend highlights persistent operational challenges. 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 significant financial strain and limited capacity to meet interest obligations comfortably.
Return on Equity (ROE), a key profitability metric, averages only 1.90%, reflecting low returns generated on shareholders’ funds. This figure suggests that the company is struggling to create value for its investors, which is a critical factor in the quality assessment and contributes to the cautious rating.
Valuation: Risky and Unfavourable
The valuation grade for National Peroxide Ltd is classified as risky. The stock currently trades at levels that are unfavourable when compared to its historical averages, signalling potential overvaluation or market scepticism about future earnings prospects. Over the past year, the stock has delivered a negative return of -40.21%, underscoring investor concerns and weak market sentiment.
Moreover, the company’s profits have declined sharply, with a fall of -113% over the same period. This steep contraction in profitability further undermines the stock’s valuation appeal and justifies the cautious stance reflected in the Strong Sell rating.
Financial Trend: Mixed Signals but Overall Negative
Despite the overall negative outlook, the financial grade is noted as positive, which may appear contradictory at first glance. This reflects some short-term financial stability or isolated improvements in certain metrics. For instance, the company reported a Profit After Tax (PAT) of ₹1.28 crore in the latest six months, although this represents a decline of -77.78% compared to previous periods.
Non-operating income constitutes a significant 263.49% of Profit Before Tax (PBT), indicating that the company’s earnings are heavily reliant on non-core activities rather than sustainable operational performance. This reliance raises concerns about the quality and sustainability of earnings, which investors should carefully consider.
Technical Outlook: Bearish Momentum
From a technical perspective, National Peroxide Ltd is graded bearish. The stock’s price action over recent months reflects downward momentum, with a 3-month return of -26.22% and a 6-month return of -34.42%. Even though there was a positive 1-day gain of 4.43% and a 1-week gain of 6.79%, these short-term upticks have not reversed the broader negative trend.
The stock’s underperformance relative to the BSE500 index over the last three years, one year, and three months further confirms the bearish technical stance. This trend suggests that market participants remain cautious, and the stock may face continued selling pressure unless there is a significant turnaround in fundamentals or sentiment.
Performance Summary and Investor Implications
As of 06 February 2026, National Peroxide Ltd’s stock performance has been disappointing, with a year-to-date return of -8.65% and a one-year return of -40.21%. These figures highlight the challenges the company faces in delivering shareholder value. The combination of weak fundamentals, risky valuation, mixed financial trends, and bearish technicals underpin the Strong Sell rating.
For investors, this rating serves as a cautionary signal. It suggests that the stock may continue to underperform and that exposure should be limited or avoided until there is clear evidence of operational improvement and financial stability. The current environment calls for careful analysis and risk management, especially given the company’s microcap status and sector-specific challenges in commodity chemicals.
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Company Profile and Market Context
National Peroxide Ltd operates within the commodity chemicals sector and is classified as a microcap company. This classification often entails higher volatility and risk due to lower liquidity and market capitalisation. The company’s sector is subject to cyclical demand and pricing pressures, which can exacerbate operational challenges during downturns.
Given the company’s current financial and technical profile, investors should weigh the risks carefully against potential rewards. The Strong Sell rating reflects a comprehensive assessment that the stock is not favourably positioned for near-term recovery or growth.
Conclusion: A Cautious Approach Recommended
In summary, National Peroxide Ltd’s Strong Sell rating by MarketsMOJO, last updated on 07 May 2025, remains justified by the company’s current fundamentals and market performance as of 06 February 2026. The stock’s below-average quality, risky valuation, mixed financial trends, and bearish technical outlook collectively suggest that investors should approach this stock with caution.
Those holding the stock may consider reassessing their positions in light of the ongoing challenges, while prospective investors are advised to seek more stable opportunities until there is clear evidence of turnaround and sustained improvement.
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