Radhika Jeweltech Ltd Downgraded to Sell Amid Technical Weakness and Market Underperformance

Technical Indicators Signal Increasing Bearishness

The most significant trigger for the downgrade was the deterioration in the technical grade, which shifted from mildly bearish to outright bearish. Key technical indicators paint a cautious picture for investors. The Moving Average Convergence Divergence (MACD) on a weekly basis is firmly bearish, while the monthly MACD remains mildly bearish. Similarly, Bollinger Bands on the weekly chart indicate bearish momentum, with the monthly trend also mildly bearish.

Daily moving averages have turned bearish, reinforcing the negative short-term momentum. The Know Sure Thing (KST) indicator, a momentum oscillator, is bearish on a weekly scale and mildly bearish monthly. Although the Dow Theory weekly reading remains mildly bullish, the absence of a clear monthly trend and neutral readings from the On-Balance Volume (OBV) indicator suggest a lack of strong buying pressure.

These technical signals coincide with recent price action: the stock closed at ₹69.78 on 16 Feb 2026, down 1.43% from the previous close of ₹70.79, and trading near its 52-week low of ₹64.00, far below its 52-week high of ₹111.48. This technical weakness has contributed heavily to the downgrade decision.

Valuation Grade Moderates but Remains Attractive

While the valuation grade has been downgraded from very attractive to attractive, Radhika Jeweltech still presents a compelling valuation relative to its peers. The company’s price-to-earnings (PE) ratio stands at 10.50, significantly lower than competitors such as Khazanchi Jewell (PE 25.04) and Shanti Gold (PE 27.55). The enterprise value to EBITDA ratio is 7.66, again below many peers, indicating a relatively cheaper valuation.

Return on capital employed (ROCE) and return on equity (ROE) are robust at 24.25% and 24.30% respectively, underscoring efficient capital utilisation and profitability. The PEG ratio of 0.30 suggests the stock is undervalued relative to its earnings growth potential. However, the downgrade in valuation grade reflects a cautious stance given the stock’s recent price weakness and the broader market context.

Comparatively, other companies in the sector such as Renaissance Global and TBZ Jewellery maintain very attractive valuations, highlighting that while Radhika Jeweltech remains attractively priced, it faces stiff competition for investor attention.

Financial Trend Shows Mixed Signals Despite Positive Quarterly Results

Radhika Jeweltech has reported positive financial performance in the recent quarter (Q3 FY25-26), with net sales reaching a quarterly high of ₹213.59 crores, PBDIT at ₹41.78 crores, and PBT less other income at ₹40.71 crores. These figures indicate operational strength and improving profitability.

Despite these encouraging numbers, the stock has underperformed the broader market substantially. Over the past year, Radhika Jeweltech’s share price has declined by 29.16%, while the Sensex has gained 9.66%. Year-to-date, the stock is down 6.59% compared to a 2.28% decline in the Sensex. This divergence suggests that market sentiment and technical factors are weighing heavily on the stock, overshadowing its fundamental improvements.

Additionally, domestic mutual funds hold a negligible stake in the company, signalling a lack of institutional conviction. Given their capacity for in-depth research, this absence may reflect concerns about the stock’s valuation or business prospects at current levels.

Quality Assessment and Market Capitalisation Considerations

Radhika Jeweltech’s overall quality rating remains modest, with a Mojo Score of 43.0 and a Mojo Grade of Sell, downgraded from Hold on 16 Feb 2026. The company’s market capitalisation grade is 4, indicating a mid-sized firm within its sector. Its low average debt-to-equity ratio of 0.10 times reflects a conservative capital structure, which is a positive quality marker.

However, the combination of weak technicals, moderate valuation appeal, and underwhelming market performance has led to a cautious stance. Investors should weigh the company’s solid financial metrics against the prevailing bearish technical outlook and subdued market sentiment.

Long-Term Performance and Outlook

Over a longer horizon, Radhika Jeweltech has delivered impressive returns, with a 5-year return of 2067.08% compared to the Sensex’s 59.83%, and a 3-year return of 83.1% versus the Sensex’s 35.81%. This demonstrates the company’s capacity for substantial wealth creation over time. However, the recent 1-year and year-to-date underperformance signals caution for near-term investors.

The stock’s current trading range near its 52-week low and the bearish technical signals suggest that momentum remains weak. Investors should monitor upcoming quarterly results and sector developments closely to gauge if the company can regain positive technical momentum and market favour.

In summary, the downgrade to Sell reflects a balanced assessment: while Radhika Jeweltech boasts attractive valuation metrics and solid financial performance, the prevailing technical weakness and market underperformance warrant a cautious approach.

Summary of Ratings and Key Metrics

Mojo Score: 43.0 (Sell, downgraded from Hold)
Market Cap Grade: 4
PE Ratio: 10.50
EV/EBITDA: 7.66
PEG Ratio: 0.30
ROCE: 24.25%
ROE: 24.30%
Debt to Equity: 0.10 times (average)
1-Year Stock Return: -29.16% vs Sensex +9.66%

Investors should consider these factors carefully when evaluating Radhika Jeweltech’s prospects in the current market environment.

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