Current Rating Overview
On 13 November 2025, MarketsMOJO revised its assessment of Rico Auto Industries Ltd, moving the rating from Hold to Buy. This change was accompanied by an increase in the Mojo Score from 64 to 71, signalling a stronger conviction in the stock’s potential. The current Mojo Grade of Buy reflects a positive outlook based on a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical indicators.
Here’s How the Stock Looks Today
As of 16 February 2026, Rico Auto Industries Ltd demonstrates robust performance across multiple dimensions. The company operates within the Auto Components & Equipments sector and is classified as a microcap stock. Despite its smaller market capitalisation, the stock has delivered impressive returns and shows promising financial health.
Quality Assessment
The company’s quality grade is assessed as average. This reflects steady operational performance and consistent profitability, though not yet at the highest echelon of industry leaders. Notably, the company has reported positive results for three consecutive quarters, with Profit Before Tax (PBT) excluding other income reaching ₹21.55 crores, growing at a rate of 46.0% compared to the previous four-quarter average. Similarly, Profit After Tax (PAT) stands at ₹15.89 crores, marking a 45.0% growth over the same period. These figures indicate a solid earnings trajectory that underpins the company’s operational quality.
Valuation Perspective
Rico Auto Industries Ltd’s valuation is currently deemed attractive. The stock trades at a discount relative to its peers’ historical averages, supported by a Return on Capital Employed (ROCE) of 7.9% and an Enterprise Value to Capital Employed ratio of 1.6. The company’s Price/Earnings to Growth (PEG) ratio stands at a notably low 0.3, signalling that the stock’s price is favourable in relation to its earnings growth potential. This valuation profile offers investors an opportunity to acquire shares at a reasonable price point with upside potential.
Financial Trend
The financial trend for Rico Auto Industries Ltd is positive. Operating profit has grown at an annualised rate of 83.18%, reflecting strong underlying business momentum. The company’s debt-equity ratio is relatively low at 0.92 times as of the half-year period, indicating prudent leverage management. Over the past year, the stock has generated a return of 82.02%, while profits have surged by 93.3%, underscoring the strength of its financial trajectory.
Technical Outlook
From a technical standpoint, the stock is rated bullish. Recent price movements show a 3.08% gain on the latest trading day, with a three-month return of 27.10% and a six-month return of 36.32%. Although the year-to-date return is negative at -7.89%, the longer-term technical indicators suggest sustained upward momentum. This bullish technical grade supports the Buy rating by signalling favourable market sentiment and potential for further price appreciation.
Implications for Investors
For investors, the Buy rating on Rico Auto Industries Ltd indicates a recommendation to consider accumulating shares based on the company’s current fundamentals and market positioning. The combination of attractive valuation, positive financial trends, and bullish technical signals suggests that the stock is well placed to deliver value over the medium to long term. However, investors should remain mindful of the company’s average quality grade and microcap status, which may entail higher volatility compared to larger, more established peers.
Sector Context
Operating within the Auto Components & Equipments sector, Rico Auto Industries Ltd benefits from the broader industry tailwinds driven by increasing automotive production and demand for specialised components. The company’s ability to sustain profit growth and maintain manageable debt levels positions it favourably amid sectoral dynamics. Its valuation discount relative to peers further enhances its appeal as a potential growth stock within this space.
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Stock Performance Summary
As of 16 February 2026, the stock’s recent performance highlights its volatility and growth potential. The one-day gain of 3.08% contrasts with a one-week decline of 6.20%, while the one-month return is a positive 2.78%. Over three and six months, the stock has appreciated by 27.10% and 36.32% respectively, reflecting strong medium-term momentum. The year-to-date return is negative at -7.89%, which may reflect short-term market fluctuations or sector-specific pressures. Nonetheless, the one-year return of 82.02% demonstrates significant appreciation, reinforcing the stock’s growth credentials.
Financial Health and Profitability
The company’s financial health is underscored by its low debt-equity ratio of 0.92 times, which is among the lowest in its recent history. This conservative leverage profile reduces financial risk and provides flexibility for future investments or expansions. Profitability metrics are equally encouraging, with operating profit growing at an annual rate of 83.18%, signalling efficient cost management and revenue growth. The consistent quarterly profit growth further validates the company’s operational strength.
Valuation Metrics in Detail
Rico Auto Industries Ltd’s valuation metrics suggest it is trading at a discount relative to its intrinsic value and peer group. The ROCE of 7.9% indicates reasonable capital efficiency, while the Enterprise Value to Capital Employed ratio of 1.6 suggests the stock is not overvalued. The PEG ratio of 0.3 is particularly noteworthy, as it implies the stock’s price is low relative to its earnings growth rate, a key indicator for value-conscious investors seeking growth opportunities.
Technical Analysis and Market Sentiment
The bullish technical grade reflects positive momentum in the stock’s price action. The recent gains and strong medium-term returns indicate that market participants are increasingly confident in the company’s prospects. This technical strength complements the fundamental analysis, providing a well-rounded rationale for the Buy rating. Investors monitoring technical signals may find this an opportune moment to consider entry or accumulation.
Conclusion
In summary, Rico Auto Industries Ltd’s current Buy rating by MarketsMOJO is supported by a balanced combination of attractive valuation, positive financial trends, and bullish technical indicators. While the company’s quality grade is average, its consistent profit growth, low leverage, and strong returns make it a compelling option within the Auto Components & Equipments sector. Investors seeking exposure to a microcap stock with growth potential and reasonable valuation may find this recommendation aligns well with their portfolio objectives.
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