Nexus Surgical and Medicare Ltd Upgraded to Sell on Technical Improvement Despite Flat Financials

Quality Assessment: Weak Long-Term Fundamentals

Nexus Surgical operates within the Non-Banking Financial Company (NBFC) sector, a space that demands consistent financial health and growth. However, the company’s long-term fundamental strength remains weak, with a compounded annual growth rate (CAGR) of operating profits declining by -2.97%. This negative growth trend highlights operational challenges that have persisted over recent years.

Quarterly results for Q2 FY25-26 were largely flat, indicating stagnation in revenue and profitability. While the company’s return on equity (ROE) stands at a robust 37.4%, this figure is overshadowed by the lack of growth momentum and the flat quarterly performance. The majority of shareholders remain non-institutional, which may reflect limited confidence from large-scale investors.

Valuation: Expensive Despite Discount to Peers

From a valuation standpoint, Nexus Surgical is considered very expensive. The stock trades at a price-to-book (P/B) ratio of 7.5, significantly higher than typical NBFC sector averages. This elevated valuation suggests that the market is pricing in high expectations for future growth or profitability improvements.

However, when compared to its peers’ historical valuations, Nexus Surgical’s current price is actually at a discount, indicating some relative value within the sector. The company’s price-earnings-to-growth (PEG) ratio is 0.7, which is below 1.0 and often interpreted as undervalued relative to earnings growth. This mixed valuation picture complicates the investment thesis, as the stock appears expensive on absolute metrics but comparatively cheaper within its peer group.

Financial Trend: Flat Performance Amid Moderate Returns

Financially, Nexus Surgical has delivered moderate returns over the past year, with an 8.27% stock price appreciation. This is slightly below the Sensex’s 10.41% return over the same period, reflecting underperformance relative to the broader market. Profit growth over the last year was 11%, which is positive but not sufficiently strong to drive a more favourable rating.

Longer-term returns tell a more nuanced story. Over five years, the stock has surged by an impressive 445.69%, vastly outperforming the Sensex’s 63.46% gain. However, the 10-year return is negative at -61.98%, indicating significant volatility and periods of underperformance. This inconsistency in financial trends contributes to investor caution.

Technical Indicators: Shift to Mildly Bullish Momentum

The primary driver behind the upgrade from Strong Sell to Sell is the improvement in technical indicators. The technical trend has shifted from mildly bearish to mildly bullish, signalling a potential positive momentum in the stock price.

Key technical signals include a bullish Moving Average Convergence Divergence (MACD) on the weekly chart, while the monthly MACD remains mildly bearish. The Relative Strength Index (RSI) shows no clear signal on the weekly timeframe but is bullish on the monthly scale. Bollinger Bands are bullish on both weekly and monthly charts, suggesting increased price volatility with an upward bias.

Other indicators such as the Know Sure Thing (KST) oscillator and Dow Theory also reflect a mildly bullish stance on the weekly timeframe, though the monthly KST remains mildly bearish. The On-Balance Volume (OBV) data is inconclusive, but the overall technical picture supports a cautious optimism among traders.

Daily moving averages remain mildly bearish, indicating some short-term resistance, but the weekly and monthly trends suggest that the stock could be entering a phase of recovery or consolidation at higher levels.

Price and Market Context

As of the latest trading session, Nexus Surgical closed at ₹18.99, up 11.71% from the previous close of ₹17.00. The stock’s 52-week high is ₹22.00, while the low stands at ₹13.26, indicating a relatively wide trading range. The recent price surge aligns with the improved technical outlook, but the stock remains below its peak levels.

Comparatively, the Sensex has shown modest gains over the short term, with a 0.50% return in the past week and 0.79% over the last month, underscoring Nexus Surgical’s recent outperformance on a relative basis.

Summary and Outlook for Investors

The upgrade of Nexus Surgical and Medicare Ltd’s rating to Sell from Strong Sell reflects a nuanced view of the company’s prospects. While technical indicators have improved, signalling a potential short- to medium-term price recovery, fundamental concerns remain significant. The company’s weak long-term financial growth, flat recent quarterly results, and expensive valuation metrics caution investors against expecting a strong rebound.

Investors should weigh the mildly bullish technical signals against the backdrop of a challenging fundamental environment. The stock’s historical volatility and mixed returns over different time horizons further complicate the investment decision. For those considering exposure to the NBFC sector, Nexus Surgical may offer some relative value compared to peers but still carries notable risks.

Given these factors, the Sell rating suggests a cautious stance, recommending investors monitor technical developments closely while remaining mindful of the company’s underlying financial and valuation challenges.

MarketsMOJO Score and Grade

MarketsMOJO currently assigns Nexus Surgical a Mojo Score of 37.0, reflecting the combined assessment of quality, valuation, financial trend, and technical parameters. The Mojo Grade has been upgraded to Sell from Strong Sell as of 11 Feb 2026, signalling a slight improvement in outlook but still indicating a negative bias overall. The company holds a Market Cap Grade of 4, consistent with its mid-tier market capitalisation within the NBFC sector.

Conclusion

In conclusion, Nexus Surgical and Medicare Ltd’s recent rating upgrade is primarily driven by improved technical trends, which have shifted from mildly bearish to mildly bullish. However, the company’s fundamental and valuation metrics remain under pressure, limiting the scope for a more positive rating. Investors should approach the stock with caution, balancing the technical optimism against the persistent financial and valuation headwinds.

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