Current Rating and Its Implications
The Strong Sell rating assigned to Responsive Industries Ltd indicates a cautious stance for investors. It suggests that the stock is expected to underperform relative to the broader market and peers in the Furniture and Home Furnishing sector. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal.
Quality Assessment
As of 30 December 2025, Responsive Industries Ltd holds an average quality grade. This reflects a middling position in terms of operational efficiency, management effectiveness, and earnings consistency. While the company maintains a stable operational base, recent quarterly results have shown signs of strain. For instance, net sales for the quarter ending September 2025 stood at ₹313.75 crores, marking a decline of 12.6% compared to the previous four-quarter average. This contraction in sales volume signals challenges in demand or competitive pressures within the sector.
Valuation Considerations
The stock is currently classified as expensive based on valuation metrics. Despite trading at a discount relative to its peers’ historical averages, the company’s valuation ratios remain elevated when considering its return on capital employed (ROCE) of 13.9%. The enterprise value to capital employed ratio stands at 3.5, indicating that investors are paying a premium for the company’s capital base. Additionally, the price/earnings to growth (PEG) ratio is 3.2, which is on the higher side, suggesting that earnings growth expectations may not be fully justified by current financial performance.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial grade for Responsive Industries Ltd is currently negative. The latest quarterly results highlight some concerning trends. Operating profit to interest ratio has dropped to a low of 10.88 times, while interest expenses have risen to ₹7.04 crores, the highest recorded in recent quarters. These figures suggest increasing financial strain and reduced buffer to cover interest obligations. Despite this, the company’s profits have grown by 8.6% over the past year, a positive sign amid broader challenges. However, this profit growth has not translated into share price appreciation, as the stock has delivered a negative return of 16.69% over the last twelve months.
Technical Outlook
From a technical perspective, the stock is rated as mildly bearish. Recent price movements show mixed signals: while the stock gained 0.83% on the last trading day and posted a 12.13% increase over three months, it has declined by 3.15% in the past month and 12.66% over six months. Year-to-date, the stock has fallen by 17.09%, underperforming the BSE500 index, which has delivered a positive 5.24% return over the same period. This underperformance relative to the broader market reflects investor caution and a lack of strong upward momentum in the share price.
Market Performance and Peer Comparison
Responsive Industries Ltd is classified as a small-cap stock within the Furniture and Home Furnishing sector. Its market capitalisation and valuation metrics place it at a discount compared to some peers, yet its financial and operational challenges weigh heavily on investor sentiment. The stock’s underperformance relative to the BSE500 index over the past year underscores the risks associated with holding the stock in the current environment.
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What This Rating Means for Investors
The Strong Sell rating serves as a cautionary signal for investors considering Responsive Industries Ltd. It suggests that the stock currently faces significant headwinds across multiple dimensions, including valuation concerns, weakening financial trends, and subdued technical momentum. Investors should carefully weigh these factors against their risk tolerance and investment horizon.
For those holding the stock, this rating implies a need for vigilance and possibly re-evaluating portfolio exposure. Prospective investors might prefer to await clearer signs of operational recovery, improved financial health, and more attractive valuation levels before committing capital.
Summary
In summary, Responsive Industries Ltd’s current Strong Sell rating by MarketsMOJO, updated on 08 Dec 2025, reflects a comprehensive assessment of its average quality, expensive valuation, negative financial trend, and mildly bearish technical outlook. As of 30 December 2025, the stock’s performance and fundamentals indicate ongoing challenges that justify a cautious investment stance.
Investors are encouraged to monitor quarterly results and market developments closely to identify any potential turnaround signals that could alter the stock’s outlook.
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