Olympic Cards Ltd Upgraded to Sell on Technical Improvements Despite Financial Challenges

Quality Assessment: Weak Fundamentals Persist

Despite the recent upgrade in rating, Olympic Cards Ltd’s fundamental quality remains under pressure. The company reported losses in the latest quarter, with a negative return on equity (ROE) signalling ongoing profitability issues. The debt profile is particularly concerning, with a debt-to-equity ratio of 18.67 times, indicating a highly leveraged balance sheet. This level of indebtedness severely limits the company’s financial flexibility and heightens risk for investors.

Moreover, the debt-to-EBITDA ratio stands at 13.16 times, underscoring the company’s low ability to service its debt from operational earnings. Negative EBITDA further compounds the risk, reflecting operational inefficiencies or challenging market conditions. While net sales for the latest six months have grown by 22.30% to ₹5.21 crores, this top-line growth has not translated into profitability, with PBDIT and PBT remaining negative at ₹-0.29 crores and ₹-1.03 crores respectively.

Valuation: Risky and Overvalued Relative to History

Olympic Cards Ltd’s valuation remains unattractive when viewed against its historical averages and market benchmarks. The stock is trading at levels that suggest elevated risk, especially given the company’s negative earnings and high leverage. Over the past year, the stock has delivered a return of -14.29%, significantly underperforming the BSE500 index, which posted a 9.00% gain over the same period. This underperformance highlights investor scepticism and the challenges the company faces in regaining market confidence.

Furthermore, the stock’s 52-week high of ₹4.21 contrasts with its current price of ₹3.00, indicating a substantial correction from previous highs. The downward trend in profitability, with profits falling by 54.3% over the last year, adds to the valuation concerns. Investors should note that despite recent price gains of 7.14% on the day of the upgrade, the longer-term valuation metrics remain unfavourable.

Financial Trend: Mixed Signals Amidst Losses

Financially, Olympic Cards Ltd has shown some positive signs in recent quarters, notably in net sales growth and marginal improvements in operating metrics. The latest six-month net sales rose by 22.30%, and the company recorded its highest quarterly PBDIT at ₹-0.29 crores, signalling a slight easing in operational losses. However, the overall financial trend remains negative due to persistent losses and weak cash flow generation.

The company’s return metrics remain in the red, with negative ROE reflecting the inability to generate shareholder value. The high debt burden continues to strain financial health, limiting the scope for investment in growth or deleveraging. These factors contribute to a cautious outlook on the company’s financial trajectory despite some short-term improvements.

Technicals: Key Driver of Upgrade to Sell

The primary catalyst for the upgrade from Strong Sell to Sell is the improvement in technical indicators, which have shifted from bearish to mildly bullish on several fronts. The technical grade change reflects a more positive market sentiment and potential for price recovery in the near term.

Key technical signals include a mildly bullish Moving Average Convergence Divergence (MACD) on the weekly chart, supported by bullish Bollinger Bands and a mildly bullish daily moving average trend. The Know Sure Thing (KST) indicator on the weekly timeframe also turned mildly bullish, while the Dow Theory shows a mildly bullish trend on the monthly scale. Although some monthly indicators remain bearish or neutral, the weekly technicals suggest a nascent recovery in momentum.

On the price front, Olympic Cards closed at ₹3.00, up from the previous close of ₹2.80, with intraday highs touching ₹3.00. This price action, combined with the technical signals, has encouraged a more optimistic stance from analysts, prompting the upgrade in rating despite the underlying fundamental weaknesses.

Comparative Performance: Lagging Behind Benchmarks

When compared with broader market indices, Olympic Cards Ltd has underperformed significantly over multiple time horizons. The stock’s one-year return of -14.29% contrasts sharply with the Sensex’s 7.97% gain and the BSE500’s 9.00% rise. Even over longer periods, such as three and five years, the stock has delivered negative returns of -6.54% and -10.45% respectively, while the Sensex has surged by 38.25% and 63.78% over the same durations.

This persistent underperformance highlights the challenges the company faces in regaining investor confidence and market share. The stock’s 10-year return of -81.58% versus the Sensex’s 249.97% gain further underscores the long-term struggles of Olympic Cards Ltd.

Outlook and Investor Considerations

While the upgrade to Sell from Strong Sell reflects a modest improvement in technical outlook, investors should remain cautious given the company’s weak fundamental profile. The high leverage, negative profitability, and poor long-term returns suggest that Olympic Cards Ltd remains a risky proposition. The recent technical signals may offer short-term trading opportunities, but the underlying financial challenges need to be addressed before a more positive rating can be considered.

Investors should weigh the company’s improving technical momentum against its deteriorated financial health and valuation risks. The stock’s recent price recovery to ₹3.00 from a low of ₹2.51 in the past 52 weeks indicates some buying interest, but the broader market context and sector dynamics should also be factored into investment decisions.

Majority shareholding by promoters continues to be a stabilising factor, but the company’s ability to deleverage and return to profitability will be critical for any sustained rating upgrades in the future.

Summary of Ratings and Scores

As of 9 February 2026, Olympic Cards Ltd holds a Mojo Score of 39.0 with a Mojo Grade of Sell, upgraded from Strong Sell. The Market Cap Grade is 4, reflecting its micro-cap status within the diversified consumer products sector. The technical grade improvement was the key driver behind the rating change, while quality, valuation, and financial trend parameters remain weak or negative.

Investors should monitor upcoming quarterly results and debt servicing metrics closely to assess whether the company can sustain operational improvements and reduce financial risk.

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