Quality Assessment: Strong Operational and Profit Growth
Reliable Data Services Ltd, operating in the Non Banking Financial Company (NBFC) sector, has demonstrated remarkable financial quality in recent quarters. The company reported net sales of ₹69.13 crores for 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, growing at a robust 53.13%. Additionally, profit before tax excluding other income (PBT less OI) rose by 74.14% to ₹3.03 crores in the same period.
These figures underscore a strong operational performance and efficient cost management, contributing to a healthy return on capital employed (ROCE) of 15.4%. This level of ROCE is indicative of the company’s ability to generate sustainable profits from its capital base, a key quality metric that has improved the overall investment appeal.
Valuation: Attractive and Discounted Relative to Peers
The valuation of Reliable Data Services Ltd has become increasingly compelling. The company’s enterprise value to capital employed ratio stands at a low 2.1, signalling an attractive valuation compared to its sector peers. Despite the strong growth trajectory, the stock trades at a discount relative to the average historical valuations of comparable NBFCs.
Moreover, the price-to-earnings growth (PEG) ratio is an exceptionally low 0.1, reflecting that the stock’s price has not yet fully priced in its rapid earnings growth. This undervaluation presents a favourable entry point for investors seeking exposure to a high-growth NBFC with solid fundamentals.
Financial Trend: Market-Beating Returns and Earnings Expansion
Over the past year, Reliable Data Services Ltd has delivered a spectacular total return of 138.26%, vastly outperforming the BSE500 benchmark return of 7.71% and the Sensex’s 7.07% over the same period. This market-beating performance is supported by a 140.2% increase in profits, highlighting the company’s ability to convert revenue growth into bottom-line expansion effectively.
Year-to-date, the stock has gained 12.53%, while the Sensex has declined by 1.92%, further emphasising the company’s resilience and growth momentum amid broader market volatility. However, short-term returns over one month showed a slight decline of 0.61%, marginally underperforming the Sensex’s 1.74% drop, which may reflect some profit-taking or sector rotation.
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Technical Analysis: Shift to Bullish Momentum
The upgrade in rating was significantly influenced by a positive shift in the technical outlook. The technical grade for Reliable Data Services Ltd has improved from mildly bullish to bullish, reflecting stronger momentum signals across multiple indicators.
Key technical signals include a bullish daily moving average trend and confirmation from Dow Theory, which is bullish on both weekly and monthly timeframes. The On-Balance Volume (OBV) indicator also supports a bullish stance, showing accumulation on weekly and monthly charts.
While some indicators such as the weekly MACD and KST remain mildly bearish, the overall technical picture is positive. Bollinger Bands on the weekly chart signal bullish momentum, although the monthly bands remain sideways, suggesting some consolidation at higher levels. The Relative Strength Index (RSI) currently shows no strong signal, indicating room for further price appreciation without being overbought.
Price action remains robust, with the stock trading at ₹163.95, close to its 52-week high of ₹175.35, and well above the 52-week low of ₹60.10. The intraday range on 9 February 2026 was ₹156.75 to ₹168.20, reflecting healthy volatility within an upward trend.
Risks: Promoter Stake Reduction Raises Caution
Despite the positive upgrade, investors should be mindful of certain risks. Notably, promoter confidence appears to be waning, as promoters have reduced their stake by 3.98% in the previous quarter, now holding 67.79% of the company. This reduction could signal concerns about future growth prospects or capital allocation strategies.
Such a decrease in promoter holding often warrants close monitoring, as it may impact market sentiment and share price stability. Investors should weigh this factor alongside the company’s strong fundamentals and technical outlook.
Conclusion: A Convincing Upgrade Backed by Comprehensive Strengths
The upgrade of Reliable Data Services Ltd from Hold to Buy by MarketsMOJO on 6 February 2026 is well justified by a confluence of factors. The company’s quality metrics, including strong sales and profit growth, attractive ROCE, and efficient capital utilisation, underpin its fundamental strength.
Valuation remains appealing, with the stock trading at a discount to peers and a very low PEG ratio, signalling potential for further upside. The financial trend is robust, with market-beating returns and consistent earnings expansion over the past year. Finally, the technical indicators have shifted decisively to a bullish stance, supporting positive price momentum.
While promoter stake reduction introduces a note of caution, the overall investment case remains compelling for investors seeking exposure to a high-growth NBFC with improving fundamentals and technicals.
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