Raymond Ltd Downgraded to Sell Amidst Weak Financials and Bearish Technicals

Quality Assessment: High ROE but Flat Growth Raises Concerns

Despite the downgrade, Raymond Ltd maintains a strong management efficiency profile, boasting a return on equity (ROE) of 35.83%, which is notably high within the Realty sector. This indicates effective utilisation of shareholder capital. However, the company’s long-term growth trajectory remains disappointing, with net sales declining at an annualised rate of -8.40% over the past five years. The flat financial results reported in Q3 FY25-26 further underscore this stagnation, with earnings per share (EPS) hitting a low of ₹0.54 for the quarter.

Additionally, non-operating income accounted for 95.60% of profit before tax (PBT) in the quarter, suggesting that core business operations are under pressure. Interest expenses for the nine months ended December 2025 rose by 21.96% to ₹60.64 crores, adding to financial strain. These factors collectively weigh on the company’s quality rating, signalling challenges in sustaining profitable growth despite operational efficiency.

Valuation: Attractive Price-to-Book but Questionable Growth Prospects

Raymond Ltd’s valuation remains compelling, with a price-to-book (P/B) ratio of 0.8, indicating the stock is trading at a discount relative to its book value. This is further supported by a robust ROE of 51.9% on a valuation basis, which typically signals undervaluation. Compared to peers, the stock’s historical valuation metrics suggest it is attractively priced, potentially offering value for long-term investors.

However, the company’s price performance has been lacklustre, with the current market price at ₹390.65, down from a 52-week high of ₹782.00 and only marginally above the 52-week low of ₹361.60. Over the past year, the stock has generated a negative return of -20.62%, underperforming the BSE500 benchmark, which delivered a positive 9.66% return in the same period. The PEG ratio stands at zero, reflecting the absence of earnings growth to justify the valuation, which tempers enthusiasm despite the apparent discount.

Financial Trend: Flat Quarterly Performance and Rising Costs

Raymond’s recent quarterly results have been underwhelming, with flat performance in Q3 FY25-26. The company’s net sales have not shown meaningful growth, and profits have declined by approximately 20.8% over the past year. The increase in interest expenses by nearly 22% over nine months further pressures profitability. Institutional investor participation has also waned, with a 2.7% reduction in stake over the previous quarter, leaving institutional holdings at 14.44%. This decline in institutional confidence is notable, given their superior analytical capabilities and influence on market perception.

Moreover, the stock has consistently underperformed its benchmark indices over multiple time horizons. Over the last three years, Raymond has generated a cumulative return of -17.55%, compared to a 35.81% gain in the Sensex. This persistent underperformance highlights structural challenges in the company’s financial trajectory and dampens prospects for near-term recovery.

Technical Analysis: Shift to Bearish Momentum Triggers Downgrade

The most significant factor driving the downgrade to Sell is the deterioration in technical indicators. Raymond’s technical grade has shifted from mildly bearish to outright bearish, reflecting weakening momentum and negative price action. Key technical metrics paint a concerning picture:

• MACD: Both weekly and monthly Moving Average Convergence Divergence indicators are bearish, signalling downward momentum.
• RSI: The Relative Strength Index shows no clear signal on weekly and monthly charts, indicating a lack of buying strength.
• Bollinger Bands: Weekly readings are bearish, with monthly bands mildly bearish, suggesting price volatility is skewed to the downside.
• Moving Averages: Daily moving averages confirm a bearish trend, reinforcing the negative outlook.
• KST: The Know Sure Thing oscillator is bearish on both weekly and monthly timeframes, further validating the downtrend.
• Dow Theory: Weekly data shows mildly bullish signals, but monthly trends indicate no clear direction, adding to uncertainty.
• On-Balance Volume (OBV): Weekly OBV shows no trend, while monthly OBV is mildly bullish, suggesting volume patterns are mixed but insufficient to reverse the bearish price action.

These technical signals collectively indicate that Raymond’s stock price is likely to face continued downward pressure in the near term, justifying the downgrade from a technical perspective.

Comparative Performance: Underwhelming Returns Against Benchmarks

Raymond’s stock returns have lagged significantly behind benchmark indices over multiple periods. The stock posted a negative 6.21% return over the past week compared to a modest -0.94% decline in the Sensex. Over one month, Raymond declined by 1.34%, slightly worse than the Sensex’s -0.35%. Year-to-date, the stock is down 8.47%, while the Sensex has fallen 2.28%. The one-year return is particularly stark, with Raymond losing 20.62% against the Sensex’s 9.66% gain.

Longer-term comparisons reveal a similar trend. Over three years, Raymond’s cumulative return of -17.55% contrasts sharply with the Sensex’s 35.81% gain. Although the stock has delivered strong absolute returns over five and ten years (230.66% and 171.09%, respectively), these are overshadowed by recent underperformance and deteriorating fundamentals.

Outlook and Investor Implications

The downgrade to Sell reflects a convergence of factors that caution investors against holding Raymond Ltd at current levels. While the company’s valuation metrics remain attractive and management efficiency is commendable, the lack of growth, rising costs, declining institutional interest, and bearish technical signals present a challenging investment case.

Investors should weigh these risks carefully, especially given the stock’s persistent underperformance relative to benchmarks and peers. The downgrade signals that the stock may continue to face headwinds, and a cautious approach is warranted until clearer signs of financial recovery and technical strength emerge.

Summary of Ratings and Scores

MarketsMOJO currently assigns Raymond Ltd a Mojo Score of 47.0, categorised as a Sell, down from a previous Hold rating. The Market Cap Grade stands at 3, reflecting mid-tier market capitalisation. The downgrade was officially recorded on 16 Feb 2026, with the latest price at ₹390.65, down 2.13% on the day. This comprehensive downgrade is primarily driven by the shift in technical grade from mildly bearish to bearish, alongside flat financial trends and subdued quality metrics.

In conclusion, Raymond Ltd’s recent downgrade underscores the importance of integrating multiple analytical dimensions—quality, valuation, financial trends, and technicals—when assessing investment opportunities. The current outlook advises prudence, with the stock facing significant challenges that may limit upside potential in the near term.

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