Piramal Pharma Downgraded to Strong Sell Amid Weak Financials and Bearish Technicals

Quality Assessment: Weakening Profitability and Debt Concerns

Piramal Pharma’s quality parameters have deteriorated markedly over recent quarters. The company reported a sharp decline in profitability in Q2 FY25-26, with Profit Before Tax (PBT) excluding other income plunging to a loss of ₹111.78 crores, representing a 340.0% fall compared to the previous four-quarter average. Net Profit After Tax (PAT) also contracted severely, registering a loss of ₹99.22 crores, down 613.2% from the prior average. This steep decline underscores operational challenges and margin pressures.

Financial leverage remains a significant concern, with a high Debt to EBITDA ratio of 3.83 times, indicating limited ability to service debt obligations comfortably. The company’s average Return on Equity (ROE) stands at a meagre 0.32%, signalling minimal profitability generated per unit of shareholder funds. Although net sales have grown at a modest annual rate of 9.15% over the last five years, this growth has not translated into commensurate profit expansion, raising questions about the sustainability of earnings quality.

Valuation: Fair but Discounted Relative to Peers

Despite the weak financials, Piramal Pharma’s valuation metrics suggest a fair price level relative to its capital employed. The company’s Return on Capital Employed (ROCE) is 2.7%, and the Enterprise Value to Capital Employed ratio stands at 2.2, indicating valuation in line with the company’s asset utilisation. The stock currently trades at a discount compared to the average historical valuations of its pharmaceutical peers, which may offer some value for long-term investors willing to weather near-term volatility.

However, the stock’s recent price performance has been disappointing. Over the past year, Piramal Pharma’s share price has declined by 29.6%, significantly underperforming the BSE500 index, which has delivered a positive 6.23% return in the same period. This underperformance reflects investor concerns about the company’s earnings trajectory and competitive positioning within the sector.

Financial Trend: Mixed Signals with Negative Quarterly Results

The recent quarterly results have been a major trigger for the downgrade. Net sales for Q2 FY25-26 fell by 10.5% to ₹2,043.72 crores compared to the previous four-quarter average, signalling weakening demand or pricing pressures. Operating profit growth, however, has shown some resilience with a five-year annual growth rate of 23.29%, suggesting pockets of operational efficiency. Yet, this has not been sufficient to offset the sharp decline in net profitability.

Long-term growth prospects appear subdued given the company’s inability to generate robust returns on equity and the high debt burden. The negative profit growth of -158.7% over the past year further emphasises the deteriorating earnings quality. Institutional investors hold a significant 45.17% stake, reflecting confidence from sophisticated market participants, but the overall financial trend remains a cause for concern.

Technical Analysis: Shift to Bearish Momentum

The technical outlook for Piramal Pharma has worsened, contributing to the downgrade to Strong Sell. The technical grade shifted from mildly bearish to outright bearish, reflecting increasing downward momentum in the stock price. Key indicators reveal a predominantly negative picture:

• MACD on the weekly chart is bearish, while monthly remains mildly bearish.


• Relative Strength Index (RSI) shows no clear signal on weekly or monthly timeframes, indicating lack of momentum.


• Bollinger Bands suggest bearish trends on weekly charts and mildly bearish on monthly charts.


• Daily moving averages are firmly bearish, reinforcing short-term downtrend.


• KST indicator is bearish on weekly charts, with no clear monthly trend.


• Dow Theory signals a mildly bullish weekly trend but no discernible monthly trend, indicating mixed longer-term signals.


• On-Balance Volume (OBV) is mildly bullish weekly but mildly bearish monthly, reflecting uncertain volume support.

Price action confirms this technical weakness, with the stock closing at ₹172.70 on 9 January 2026, down 4.51% from the previous close of ₹180.85. The 52-week high was ₹253.40, while the low stands at ₹165.05, indicating the stock is trading near its annual lows and under pressure.

Comparative Performance: Underperformance Against Benchmarks

When compared to the broader market, Piramal Pharma’s returns have lagged significantly. Over the last one year, the stock has declined by 29.6%, whereas the Sensex has appreciated by 7.72%. Even over a three-year horizon, the stock’s 52.86% return trails the Sensex’s 40.53% gain, though it still outperforms the benchmark in that period. Shorter-term returns such as one month and year-to-date show marginal negative or flat performance, underscoring recent weakness.

This relative underperformance highlights the challenges the company faces in regaining investor confidence amid sector volatility and internal financial pressures.

Outlook and Investor Considerations

The downgrade to Strong Sell by MarketsMOJO reflects a comprehensive reassessment of Piramal Pharma’s fundamentals and technicals. The company’s weak profitability, high leverage, and disappointing quarterly results weigh heavily against its fair valuation and pockets of operational growth. The bearish technical indicators further caution investors about near-term price declines.

Investors should carefully weigh the risks associated with the company’s financial health and market positioning. While the stock trades at a discount relative to peers, the structural challenges and negative earnings momentum suggest limited upside in the short to medium term. Institutional holdings at 45.17% indicate some confidence from informed investors, but the overall sentiment remains cautious.

Given the current environment, a Strong Sell rating is appropriate until the company demonstrates sustained improvement in profitability, debt servicing capacity, and technical momentum.

Summary of Ratings and Scores

MarketsMOJO has assigned Piramal Pharma Ltd a Mojo Score of 26.0, reflecting a Strong Sell grade, downgraded from the previous Sell rating as of 8 January 2026. The Market Cap Grade is 3, indicating a mid-sized company with moderate liquidity. The downgrade is primarily driven by a shift in technical grade from mildly bearish to bearish, combined with deteriorating financial trends and weak quality metrics.

Key Financial Metrics at a Glance:

• Debt to EBITDA Ratio: 3.83 times (high leverage)


• Return on Equity (average): 0.32% (low profitability)


• Net Sales Growth (5-year CAGR): 9.15% (modest growth)


• Operating Profit Growth (5-year CAGR): 23.29% (healthy growth)


• ROCE: 2.7% (fair capital efficiency)


• Enterprise Value to Capital Employed: 2.2 (fair valuation)


• Institutional Holdings: 45.17% (significant stake)

Technical Indicators Summary:

• MACD Weekly: Bearish


• MACD Monthly: Mildly Bearish


• RSI Weekly & Monthly: No Signal


• Bollinger Bands Weekly: Bearish


• Bollinger Bands Monthly: Mildly Bearish


• Moving Averages Daily: Bearish


• KST Weekly: Bearish


• Dow Theory Weekly: Mildly Bullish


• OBV Weekly: Mildly Bullish


• OBV Monthly: Mildly Bearish

Price Performance:

• Current Price (9 Jan 2026): ₹172.70


• Previous Close: ₹180.85


• 52-Week High: ₹253.40


• 52-Week Low: ₹165.05


• Day Change: -4.51%

Returns Comparison with Sensex:

• 1 Week: +1.65% vs Sensex -1.18%


• 1 Month: -1.12% vs Sensex -1.08%


• Year-to-Date: +0.23% vs Sensex -1.22%


• 1 Year: -29.6% vs Sensex +7.72%


• 3 Years: +52.86% vs Sensex +40.53%

Overall, the downgrade to Strong Sell reflects a confluence of weak financial results, high leverage, and bearish technical signals, signalling caution for investors considering exposure to Piramal Pharma Ltd in the current market environment.

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