Thomas Scott India Ltd Upgraded to Hold as Technicals Improve Amid Strong Financials

Technical Trends Shift to Mildly Bearish from Bearish

The primary catalyst for the rating upgrade is the change in the technical grade, which moved from a bearish stance to mildly bearish. This shift is underpinned by a mixed but improving set of technical indicators. On a weekly basis, the Moving Average Convergence Divergence (MACD) remains bearish, while the monthly MACD has softened to mildly bearish. The Relative Strength Index (RSI) shows no clear signal on both weekly and monthly charts, indicating a neutral momentum.

Bollinger Bands present a contrasting picture: mildly bearish on the weekly timeframe but bullish on the monthly scale, suggesting that while short-term volatility remains cautious, longer-term price action is gaining strength. Daily moving averages are mildly bearish, reflecting some near-term resistance, but the Dow Theory indicator has turned mildly bullish on the weekly chart, hinting at a potential trend reversal. Meanwhile, the KST oscillator remains bearish weekly and mildly bearish monthly, and On-Balance Volume (OBV) shows no trend weekly but mildly bearish monthly.

These mixed signals collectively justify the technical upgrade to mildly bearish, indicating that while the stock is not yet in a strong uptrend, the downtrend is losing momentum and may be stabilising.

Valuation Remains Fair with Discount to Peers

Thomas Scott India Ltd’s valuation metrics support the Hold rating. The company’s Return on Capital Employed (ROCE) stands at a respectable 16.2%, signalling efficient use of capital. Its Enterprise Value to Capital Employed ratio is 3.5, which is considered fair and suggests the stock is not overvalued relative to its capital base. Importantly, the stock trades at a discount compared to its peers’ average historical valuations, offering a valuation cushion for investors.

Despite a negative return of -26.85% over the past year, the company’s profits have risen by 44.5%, resulting in a Price/Earnings to Growth (PEG) ratio of 2.9. This elevated PEG ratio indicates that the stock’s price has not yet fully reflected its earnings growth potential, which may attract value-conscious investors looking for turnaround opportunities.

Robust Financial Trend with Consistent Growth

Thomas Scott India Ltd’s financial trend remains a strong pillar supporting the upgrade. The company has reported very positive quarterly results for Q2 FY25-26, with net sales reaching ₹56.93 crores, marking a 21.4% increase compared to the previous four-quarter average. Operating profit (PBDIT) hit a record ₹8.46 crores, with an operating profit margin of 14.86%, the highest recorded in recent quarters.

Over the long term, the company has demonstrated impressive growth rates: net sales have grown at an annualised rate of 73.51%, while operating profit has surged by 92.63%. The operating profit growth of 38.24% in the latest quarter further underscores the company’s operational efficiency and profitability. Notably, Thomas Scott has declared positive results for 11 consecutive quarters, reflecting sustained financial health and resilience.

The company’s debt servicing ability is strong, with a low Debt to EBITDA ratio of 1.37 times, indicating manageable leverage and reduced financial risk. This solid financial footing supports the Hold rating, as it suggests the company can fund growth initiatives without undue strain.

Quality Assessment and Market Performance

Thomas Scott’s overall quality, as measured by the MarketsMOJO Mojo Score, stands at 51.0, which corresponds to a Hold grade. This is a significant improvement from the previous Sell rating, reflecting better fundamentals and technical outlook. The company’s market capitalisation grade is 4, indicating a mid-tier valuation relative to market peers.

Despite the upgrade, the stock has underperformed the broader market over the past year. While the BSE500 index generated returns of 9.00%, Thomas Scott’s stock price declined by 26.85%. However, the company’s long-term returns tell a different story: over three years, the stock has delivered a staggering 609.89% return, and over five years, an extraordinary 5750.77% return, vastly outperforming the Sensex’s 38.25% and 63.78% returns respectively over the same periods.

This disparity between short-term underperformance and long-term outperformance suggests that the recent price weakness may be a temporary correction rather than a fundamental deterioration.

Stock Price and Market Data

As of 10 February 2026, Thomas Scott India Ltd’s stock closed at ₹341.10, up 6.48% from the previous close of ₹320.35. The stock traded within a range of ₹324.80 to ₹343.55 during the day. Its 52-week high stands at ₹474.35, while the 52-week low is ₹280.65, indicating a significant price volatility over the past year.

The company’s majority shareholders remain the promoters, signalling stable ownership and potential alignment with shareholder interests.

Investment Outlook

The upgrade to Hold reflects a balanced view of Thomas Scott India Ltd’s prospects. The improved technical indicators suggest that the stock’s downtrend is moderating, while the company’s strong financial performance and fair valuation provide a solid foundation for future growth. However, the recent underperformance relative to the market and the mildly bearish technical signals caution investors to maintain a watchful stance.

Investors should monitor upcoming quarterly results and technical developments closely to assess whether the stock can transition from a Hold to a Buy rating in the near term. The company’s consistent profitability, low leverage, and attractive long-term returns make it a compelling candidate for investors seeking exposure to the Garments & Apparels sector with a moderate risk appetite.

Summary of Ratings and Scores

MarketsMOJO Mojo Score: 51.0 (Hold, upgraded from Sell on 9 Feb 2026)
Market Cap Grade: 4
Technical Grade: Mildly Bearish (upgraded from Bearish)
Financial Trend: Very Positive
Quality Grade: Improved to Hold from Sell

Thomas Scott India Ltd’s upgrade is a testament to the company’s improving fundamentals and stabilising technical outlook, signalling a cautious but constructive stance for investors.

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