Thakkers Developers Ltd Upgraded to Sell on Improved Financial and Technical Metrics

Financial Performance Drives Upgrade

The primary catalyst behind the rating upgrade is the company’s very positive financial trend observed in the quarter ended December 2025. Thakkers Developers reported its highest-ever quarterly figures across key metrics, signalling a turnaround from previous quarters. Net sales surged to ₹14.39 crores, while profit before depreciation, interest and tax (PBDIT) reached ₹4.84 crores, both all-time highs for the company.

Profit before tax excluding other income (PBT less OI) stood at ₹4.15 crores, and net profit after tax (PAT) soared to ₹5.08 crores. This translated into an earnings per share (EPS) of ₹5.61 for the quarter, marking a significant improvement from prior periods. The financial trend score jumped from a negative -7 three months ago to a robust +23, underscoring the strength of the recent results.

However, it is important to note that despite this short-term upswing, the company’s long-term fundamentals remain weak. Over the past five years, Thakkers Developers has experienced a negative compound annual growth rate (CAGR) of -11.27% in operating profits. Return on equity (ROE) remains modest at 3.97%, and return on capital employed (ROCE) is low at 1.08%, reflecting limited efficiency in capital utilisation.

Valuation Adjusted but Remains Expensive

The valuation grade for Thakkers Developers has been revised from very expensive to expensive, reflecting a slight moderation in price multiples. The company currently trades at a price-to-earnings (PE) ratio of 11.38, which is lower than some of its more richly valued peers but still elevated given its modest profitability metrics.

Price-to-book value stands at 0.82, indicating the stock is trading below its book value, which may offer some margin of safety. Enterprise value to EBITDA (EV/EBITDA) is at 15.89, suggesting the market is pricing in expectations of continued earnings improvement. However, return on capital employed remains low at 1.08%, which tempers enthusiasm for the valuation.

Comparatively, peers such as Elpro International and Arihant Foundations Housing also trade at expensive multiples, while others like Shriram Properties and Suraj Estate are considered attractive or very attractive based on valuation metrics. This places Thakkers Developers in a middle ground, expensive but not excessively so relative to the sector.

Technical Indicators Show Mild Improvement

Technically, the stock’s trend has shifted from bearish to mildly bearish, signalling a tentative improvement in market sentiment. Weekly MACD readings have turned mildly bullish, although monthly MACD remains bearish. Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal, indicating a neutral momentum stance.

Bollinger Bands on weekly and monthly timeframes remain mildly bearish, while daily moving averages also suggest a mildly bearish trend. The KST indicator continues to show bearish signals on weekly and monthly charts, but Dow Theory assessments are mildly bullish, reflecting some underlying strength in price action.

These mixed technical signals suggest that while the stock is not yet in a strong uptrend, the downward momentum has eased, providing a more stable base for potential gains. The stock price has recently traded between ₹133.20 and ₹140.40, closing at ₹139.45, up 1.97% from the previous close of ₹136.75.

Stock Performance Relative to Benchmarks

Over the past week, Thakkers Developers outperformed the Sensex with a 6.13% gain compared to the benchmark’s 0.98% decline. Over one month, the stock rose 1.05%, slightly ahead of the Sensex’s 0.14% fall. Year-to-date, the stock’s return is marginally negative at -0.39%, but this is better than the Sensex’s -2.08% performance.

However, longer-term returns remain disappointing. The stock has lost 21.66% over the last year, significantly underperforming the Sensex’s 9.81% gain. Over three years, the stock’s return is a modest 2.76%, well below the Sensex’s 36.80%. Despite this, the 10-year return of 34.09% shows some recovery over the very long term, though still trailing the Sensex’s 256.90% gain.

This underperformance highlights the challenges the company faces in delivering sustained shareholder value despite recent improvements.

Quality Assessment and Long-Term Outlook

Despite the recent upgrade, Thakkers Developers retains a low overall Mojo Score of 34.0 and a Mojo Grade of Sell, improved from a previous Strong Sell rating. The company’s market capitalisation grade is 4, reflecting its micro-cap status within the realty sector. Promoters remain the majority shareholders, providing some stability in ownership.

However, the company’s weak long-term fundamental strength, evidenced by negative operating profit growth over five years and modest returns on equity and capital employed, continues to weigh on its quality rating. The stock’s valuation premium relative to peers and its underperformance against broader market indices over multiple time horizons further temper enthusiasm.

Investors should weigh the recent positive quarterly performance and improved technical signals against these structural challenges. While the upgrade to Sell from Strong Sell recognises progress, it stops short of endorsing a Buy or Strong Buy rating, signalling cautious optimism rather than a full turnaround.

Conclusion

Thakkers Developers Ltd’s investment rating upgrade reflects a combination of very positive quarterly financial results, a shift to mildly improved technical trends, and a moderation in valuation multiples. The company’s highest-ever quarterly sales and profits have driven a significant improvement in its financial trend score, while technical indicators suggest easing bearish momentum.

Nonetheless, the stock remains expensive relative to its earnings quality and continues to face long-term fundamental headwinds. Its underperformance against the Sensex over one and three years highlights the challenges ahead. The current Sell rating acknowledges the progress made but advises investors to remain cautious given the company’s mixed outlook.

Market participants should monitor upcoming quarterly results and sector developments closely to assess whether the positive momentum can be sustained and translated into a more durable recovery in fundamentals and share price performance.

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