Reliable Data Services Ltd Downgraded to Hold Amid Mixed Technical and Valuation Signals

Quality Assessment: Sustained Growth Amidst Sector Challenges

Reliable Data Services Ltd maintains a solid quality profile, underpinned by strong operational performance and consistent profitability. The company reported net sales of ₹69.13 crores in the latest quarter (Q2 FY25-26), marking an impressive annual growth rate of 45.06%. Profit after tax (PAT) for the latest six months stood at ₹3.92 crores, reflecting a substantial increase of 53.13%. Furthermore, profit before tax excluding other income (PBT less OI) rose by 74.14% to ₹3.03 crores, signalling operational efficiency improvements.

Return on Capital Employed (ROCE) remains healthy at 15.4%, indicating effective utilisation of capital resources. These metrics collectively affirm the company’s ability to generate sustainable earnings growth, a key factor supporting its quality rating. However, despite these positives, the overall Mojo Grade has been adjusted to Hold, reflecting a more balanced outlook.

Valuation: Attractive Yet Discounted Relative to Peers

From a valuation perspective, Reliable Data Services Ltd presents a compelling case. The stock trades at an enterprise value to capital employed ratio of 2, which is considered very attractive within the NBFC sector. This valuation is notably discounted compared to the historical averages of its peer group, suggesting potential upside for value-oriented investors.

Moreover, the company’s Price/Earnings to Growth (PEG) ratio stands at a remarkably low 0.1, underscoring the stock’s undervaluation relative to its earnings growth trajectory. Over the past year, the stock has delivered a remarkable return of 108.01%, significantly outperforming the broader market benchmark, the BSE500, which returned 4.98% over the same period. Profits have surged by 140.2% in the last year, reinforcing the valuation appeal.

Financial Trend: Robust Growth but Signs of Moderation

The financial trend for Reliable Data Services Ltd remains positive, with strong top-line and bottom-line growth over recent quarters. The company’s net sales growth rate of 45.06% annually and PAT growth of 53.13% over the last six months highlight its operational momentum. Additionally, the PBT less other income growth of 74.14% signals improving core profitability.

However, despite these encouraging figures, the downgrade to Hold reflects a cautious interpretation of the sustainability of this growth amid broader market conditions. The company’s market capitalisation grade remains at 4, indicating a mid-tier valuation relative to market peers. Investors should note that while the company’s long-term growth prospects are healthy, short-term earnings volatility and sector headwinds may temper near-term performance.

Technical Analysis: Shift from Bullish to Mildly Bullish Signals

The most significant factor influencing the rating downgrade is the change in technical indicators. Reliable Data Services Ltd’s technical trend has shifted from bullish to mildly bullish, signalling a more cautious market sentiment. Key technical metrics reveal a mixed picture:

• MACD (Moving Average Convergence Divergence): Weekly readings have turned mildly bearish, indicating a potential slowdown in upward momentum, while monthly signals remain neutral.


• RSI (Relative Strength Index): Both weekly and monthly RSI readings currently show no clear signal, suggesting a lack of strong directional momentum.


• Bollinger Bands: Weekly indicators remain mildly bullish, reflecting some price stability and potential for moderate gains.


• Moving Averages: Daily moving averages are mildly bullish, supporting a cautiously optimistic short-term outlook.


• KST (Know Sure Thing): Weekly KST is mildly bearish, while monthly remains neutral, adding to the mixed technical signals.


• Dow Theory: Weekly trends show no clear direction, but monthly trends remain bullish, indicating longer-term positive momentum.


• On-Balance Volume (OBV): Weekly readings show no trend, whereas monthly OBV is bullish, suggesting accumulation over the longer term.

These technical nuances have led analysts to temper their enthusiasm, resulting in the downgrade from Buy to Hold. The stock’s price closed at ₹150.95 on 21 Jan 2026, down 1.66% from the previous close of ₹153.50, and remains below its 52-week high of ₹173.00 but well above its 52-week low of ₹60.10.

Comparative Market Performance

Reliable Data Services Ltd has outperformed the Sensex and broader market indices over multiple time horizons. The stock’s one-year return of 108.01% dwarfs the Sensex’s 6.63% return and the BSE500’s 4.98% return. Year-to-date, the stock has gained 3.6%, while the Sensex has declined by 3.57%. Over shorter periods such as one month, the stock rose 1.31% compared to a 3.24% decline in the Sensex, and over one week, it remained flat while the Sensex fell 1.73%.

This market-beating performance underscores the company’s resilience and growth potential, even as technical signals suggest a more cautious near-term outlook.

Shareholding and Sector Context

The majority shareholding of Reliable Data Services Ltd remains with promoters, providing stability and aligned interests with minority shareholders. The company operates within the NBFC sector, which has witnessed significant regulatory and market shifts in recent years. Despite these challenges, Reliable Data has managed to sustain strong growth and profitability, aided by its strategic positioning and operational efficiency.

Its industry classification as IT - Software within the NBFC sector highlights a diversified business model that leverages technology to enhance financial services delivery. This hybrid positioning may offer competitive advantages but also exposes the company to sector-specific risks and market volatility.

Conclusion: A Balanced Outlook Calls for Caution

In summary, the downgrade of Reliable Data Services Ltd’s investment rating from Buy to Hold reflects a comprehensive reassessment of its quality, valuation, financial trend, and technical indicators. While the company’s fundamental financial performance remains robust, with strong sales and profit growth, and valuation metrics that suggest undervaluation, the shift in technical signals to a mildly bullish stance has introduced caution.

Investors should weigh the company’s attractive long-term growth prospects and market-beating returns against the current technical uncertainties and sector dynamics. The Hold rating suggests that while Reliable Data Services Ltd remains a quality stock, it may be prudent to await clearer technical confirmation before committing additional capital.

Market participants are advised to monitor upcoming quarterly results and technical developments closely, as these will be critical in determining the stock’s trajectory in the near term.

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