Pacific Industries Ltd is Rated Strong Sell

Current Rating and Its Significance

MarketsMOJO’s Strong Sell rating for Pacific Industries Ltd indicates a cautious stance for investors, signalling that the stock currently exhibits multiple weaknesses across key evaluation parameters. This rating suggests that investors should consider avoiding new positions or potentially reducing exposure, given the company’s ongoing challenges. The rating was last revised on 28 May 2025, when the Mojo Score dropped sharply from 40 to 5, reflecting a significant deterioration in the company’s outlook.

Here’s How the Stock Looks Today

As of 21 February 2026, Pacific Industries Ltd remains under pressure, with its microcap status and sector classification within diversified consumer products offering limited cushioning against adverse trends. The stock’s one-year return stands at a negative 34.92%, underscoring sustained underperformance relative to broader market indices such as the BSE500. The latest data shows a continuing downtrend, with the stock price declining by 0.55% on the most recent trading day and a six-month return of -23.98%.

Quality Assessment

The company’s quality grade is below average, reflecting weak operational and profitability metrics. Over the past five years, Pacific Industries has experienced a compound annual growth rate (CAGR) of -35.97% in operating profits, signalling a persistent erosion of core earnings power. The firm’s ability to service debt is notably poor, with an average EBIT to interest coverage ratio of just 0.83, indicating potential liquidity stress. Return on equity (ROE) averages a modest 2.34%, highlighting limited efficiency in generating shareholder returns. These factors collectively point to fundamental weaknesses that weigh heavily on the stock’s outlook.

Valuation Considerations

Despite the deteriorating fundamentals, the stock trades at a very expensive valuation. The price-to-book value ratio stands at 0.2, which, while appearing low numerically, is considered high relative to the company’s earnings and asset quality. The valuation premium compared to peers is unwarranted given the company’s negative profit trajectory. The latest quarterly net sales have fallen to Rs 26.69 crores, the lowest recorded, while net profit has plunged by 69.73%, reinforcing the disconnect between price and underlying value. Investors should be wary of the elevated valuation in the context of declining profitability.

Financial Trend and Profitability

Financially, Pacific Industries Ltd is exhibiting a very negative trend. The company has reported negative results for three consecutive quarters, with the latest six-month profit after tax (PAT) at Rs 0.70 crore, reflecting a decline of 47.29%. Operating profit to interest coverage in the latest quarter is at a low 1.44 times, signalling tight margins and limited buffer against financial obligations. The sustained fall in net profits by over 60% in the past year further emphasises the company’s struggle to stabilise earnings. These trends contribute to the cautious rating and highlight the risks for investors.

Technical Outlook

From a technical perspective, the stock is graded bearish. The price action over the past year and beyond shows consistent underperformance relative to benchmark indices. The stock’s negative returns over one month (-6.17%), three months (-8.33%), and six months (-23.98%) confirm a downtrend that has yet to show signs of reversal. This technical weakness compounds the fundamental and valuation concerns, suggesting limited near-term upside potential.

Investor Implications

For investors, the Strong Sell rating on Pacific Industries Ltd serves as a clear signal to exercise caution. The combination of weak quality metrics, expensive valuation relative to earnings, deteriorating financial trends, and bearish technical indicators suggests that the stock is currently unattractive for accumulation. Investors should closely monitor the company’s quarterly results and any strategic initiatives aimed at reversing the negative trends before considering exposure.

Summary of Key Metrics as of 21 February 2026

Pacific Industries Ltd’s financial dashboard reveals a challenging environment. Operating profits have declined at a CAGR of -35.97% over five years, while the company’s EBIT to interest coverage ratio remains below 1, indicating financial strain. The ROE of 2.34% is insufficient to generate meaningful shareholder value, and the stock’s valuation remains elevated despite these weaknesses. The company’s recent quarterly results show a net profit decline of nearly 70%, with sales at historic lows. The technical trend remains bearish, with the stock underperforming the BSE500 index across multiple time frames.

Conclusion

In conclusion, the Strong Sell rating assigned to Pacific Industries Ltd by MarketsMOJO reflects a comprehensive assessment of the company’s current financial health and market position. Investors should interpret this rating as a cautionary signal, indicating that the stock currently faces significant headwinds across quality, valuation, financial trend, and technical parameters. Until there is clear evidence of operational turnaround and improved financial metrics, the stock is likely to remain under pressure. Careful monitoring and risk management are advised for existing shareholders, while potential investors may prefer to explore more stable opportunities within the diversified consumer products sector.

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