Oswal Green Tech Ltd Upgraded to 'Sell' as Financials and Valuation Improve

Financial Trend: From Positive to Very Positive

The primary catalyst behind the upgrade is Oswal Green Tech’s robust financial performance in the quarter ended December 2025. The company’s financial trend score surged from 10 to 21 over the past three months, reflecting a very positive trajectory. Key quarterly metrics reached record highs, including a PBDIT of ₹3.40 crores and an operating profit to net sales ratio of 26.07%, underscoring operational efficiency improvements.

Profit before tax excluding other income (PBT less OI) also hit a peak of ₹2.67 crores, while net profit after tax (PAT) soared to ₹8.58 crores. Earnings per share (EPS) for the quarter stood at ₹0.33, the highest recorded in recent periods. These figures indicate a significant turnaround in profitability and operational leverage, which have been instrumental in the upgrade decision.

However, the company’s net sales for the quarter were the lowest at ₹13.04 crores, signalling some top-line pressure. Additionally, non-operating income accounted for 71.50% of profit before tax, suggesting that a substantial portion of earnings is derived from non-core activities, which may not be sustainable in the long run.

Valuation: Downgraded from Expensive to Fair

Alongside financial improvements, Oswal Green Tech’s valuation grade was upgraded from expensive to fair. The company currently trades at a price-to-earnings (PE) ratio of 37.19, which, while elevated, is reasonable relative to its sector peers. The price-to-book (P/B) value is notably low at 0.30, indicating that the stock is trading at a discount to its book value, a positive sign for value investors.

Enterprise value to EBITDA (EV/EBITDA) and EV to EBIT ratios are negative (-151.89 and -44.94 respectively), reflecting accounting losses or unusual financial structuring in prior periods. However, the PEG ratio of 0.61 suggests that the stock is undervalued relative to its earnings growth potential, which has been buoyed by recent profit increases of 61.3% year-on-year.

Return on capital employed (ROCE) remains negative at -0.72%, and return on equity (ROE) is modest at 0.80%, highlighting ongoing challenges in generating efficient returns on invested capital. Despite these concerns, the fair valuation grade reflects a more balanced view of the company’s prospects compared to its previous expensive rating.

Quality Assessment: Weak Long-Term Fundamentals

Despite the recent upgrade, Oswal Green Tech’s quality rating remains subdued due to weak long-term fundamentals. The company’s average ROE over recent years is a mere 1.03%, signalling limited profitability relative to shareholder equity. Furthermore, operating profit has declined at an annualised rate of -28.11%, indicating structural challenges in sustaining growth.

Stock price performance has also been disappointing. Over the past year, Oswal Green Tech’s share price has fallen by 31.52%, significantly underperforming the Sensex, which gained 8.52% over the same period. The stock’s three-year return of 14.09% also lags behind the Sensex’s 36.73% gain, reflecting persistent underperformance in both short and medium terms.

Technicals: Mixed Signals Amid Price Volatility

Technically, the stock closed at ₹29.15 on 16 February 2026, down 1.02% from the previous close of ₹29.45. The day’s trading range was ₹28.42 to ₹29.59, with the 52-week high at ₹50.83 and low at ₹25.60. The stock’s recent weekly return of 2.57% outperformed the Sensex’s decline of 1.14%, but monthly and year-to-date returns remain negative at -1.82% and -12.52% respectively.

Promoter confidence appears to be strengthening, with promoters increasing their stake by 0.82% in the last quarter to hold 70.01% of the company. This uptick in promoter holding is often interpreted as a positive signal regarding the company’s future prospects and management’s commitment.

Contextualising the Upgrade

The upgrade to a Sell rating from Strong Sell reflects a nuanced assessment by analysts who have recognised the company’s recent operational improvements and more reasonable valuation metrics. The MarketsMOJO Mojo Score currently stands at 32.0, with a Mojo Grade of Sell, improved from a prior Strong Sell grade. The company’s market capitalisation grade remains modest at 4, consistent with its micro-cap status.

While the short-term financials and valuation have improved, the company’s long-term growth prospects and fundamental strength remain under pressure. Investors should weigh the recent positive quarterly results and promoter stake increase against the backdrop of weak historical returns and below-par profitability ratios.

Oswal Green Tech’s stock performance relative to the Sensex and its NBFC peers suggests that while the company is recovering, it still faces significant challenges in regaining investor confidence and delivering sustained growth.

Investment Implications

For investors, the upgrade signals a cautious optimism. The improved financial trend and fair valuation may offer a more attractive entry point compared to the previous rating. However, the company’s weak long-term fundamentals and volatile price performance warrant a conservative stance. The Sell rating suggests that while the stock is no longer a strong sell, it is not yet a compelling buy, and investors should monitor upcoming quarters for confirmation of sustained improvement.

Given the mixed signals, portfolio managers and retail investors alike may consider diversifying exposure within the NBFC sector, balancing Oswal Green Tech’s potential upside against its inherent risks.

Summary

In summary, Oswal Green Tech Ltd’s investment rating upgrade to Sell is driven by a very positive financial trend in the latest quarter, a shift to fair valuation metrics, and increased promoter confidence. However, the company’s weak long-term fundamentals, modest returns on equity, and underwhelming stock price performance relative to benchmarks temper enthusiasm. The rating change reflects a balanced view that recognises recent progress while acknowledging ongoing challenges.

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