Sizemasters Technology Ltd Upgraded to Buy on Strong Financials and Bullish Technicals

Technical Trends Drive Upgrade

The primary catalyst for the rating upgrade was a marked improvement in Sizemasters Technology’s technical grade, which shifted from mildly bullish to bullish. Key technical indicators underpinning this change include a bullish stance in Bollinger Bands on both weekly and monthly charts, daily moving averages signalling upward momentum, and the KST (Know Sure Thing) indicator confirming bullish trends on weekly and monthly timeframes. Although the MACD remains mildly bearish on weekly and monthly scales, the overall technical picture is positive, supported by a mildly bullish Dow Theory weekly signal and neutral RSI readings.

This technical strength has translated into tangible market performance, with the stock price rising 4.98% on the day of the upgrade to ₹174.85 from a previous close of ₹166.55. The stock’s 52-week range stands between ₹110.55 and ₹239.00, indicating room for further appreciation given current momentum.

Financial Trend: Robust Growth and Profitability

Sizemasters Technology’s financial performance has been notably strong, particularly in the recent quarters. The company reported very positive results for Q2 FY25-26, with net sales reaching a quarterly high of ₹12.72 crores and operating cash flow for the year peaking at ₹3.19 crores. Profit after tax (PAT) for the first nine months rose to ₹2.97 crores, reflecting sustained profitability.

Annual net sales growth stands at an impressive 78.89%, while the company’s net sales surged by 264.47% in the latest quarter, underscoring accelerating demand and operational efficiency. The return on equity (ROE) remains high at 18.42%, signalling effective management and capital utilisation. Additionally, the company maintains a conservative capital structure with an average debt-to-equity ratio of just 0.07 times, minimising financial risk.

Valuation: Expensive Yet Justified by Growth

Despite the strong fundamentals, Sizemasters Technology’s valuation is on the higher side. The stock trades at a price-to-book (P/B) ratio of 10.6, which is considered very expensive relative to typical sector averages. The company’s ROE of 19.3% supports this premium valuation, but investors should note the PEG ratio of 2.5, indicating that the stock’s price growth is outpacing earnings growth to some extent.

However, the stock is currently trading at a discount compared to its peers’ historical valuations, suggesting that while pricey, it may still offer relative value within the Non-Ferrous Metals sector. This valuation context, combined with strong growth metrics, justifies the upgrade to a Buy rating.

Quality Assessment: High Management Efficiency and Market Position

The company’s quality grade has been bolstered by its consistent financial discipline and market-beating returns. Sizemasters Technology has delivered a 32.16% return over the past year, significantly outperforming the broader BSE500 index return of 10.15% during the same period. This outperformance reflects both operational excellence and favourable market conditions.

Promoters remain the majority shareholders, providing stability and alignment of interests with investors. The company’s strong management efficiency, evidenced by its high ROE and low leverage, further enhances its quality profile. These factors contribute to the Mojo Score of 70.0 and a Mojo Grade upgrade from Hold to Buy, reflecting confidence in the company’s sustainable growth prospects.

Comparative Market Performance and Risks

When compared to the Sensex, Sizemasters Technology has demonstrated superior returns across multiple timeframes. Over one week, the stock gained 7.87% while the Sensex declined 1.69%. Year-to-date, the stock is up 12.16% versus a Sensex fall of 1.87%. Over the last year, the stock’s 32.16% return far exceeds the Sensex’s 9.56% gain, highlighting its strong market positioning.

However, investors should remain mindful of valuation risks. The elevated P/B ratio and PEG ratio suggest that the stock’s price already incorporates significant growth expectations. While profits have increased by 22% over the past year, this growth rate is outpaced by the stock’s price appreciation, which may lead to volatility if earnings momentum slows.

Furthermore, technical indicators, while generally bullish, still show some mixed signals such as mildly bearish MACD readings. These nuances warrant cautious optimism and suggest that investors should monitor ongoing quarterly results and market conditions closely.

Conclusion: Upgrade Reflects Balanced Optimism

The upgrade of Sizemasters Technology Ltd from Hold to Buy by MarketsMOJO is a reflection of a comprehensive improvement across four critical parameters: technicals, financial trends, valuation, and quality. The bullish technical indicators and strong recent price performance provide a solid foundation for the upgrade. Meanwhile, the company’s robust financial results, high management efficiency, and market-beating returns underpin confidence in its growth trajectory.

Although the valuation remains on the expensive side, it is supported by strong fundamentals and relative discount to peers’ historical valuations. Investors should weigh the growth potential against valuation risks and monitor the company’s quarterly performance for confirmation of sustained momentum.

Overall, Sizemasters Technology Ltd’s upgrade to a Buy rating signals a positive outlook for investors seeking exposure to the Non-Ferrous Metals sector with a company demonstrating strong operational execution and improving market sentiment.

Unlock special upgrade rates for a limited period. Start Saving Now →