Understanding the Current Rating
The 'Hold' rating assigned to TVS Srichakra Ltd indicates a neutral stance for investors, suggesting that the stock is fairly valued at present and may not offer significant upside or downside in the near term. This rating is based on 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 potential.
Quality Assessment
As of 30 December 2025, TVS Srichakra’s quality grade is considered average. The company’s ability to generate returns on equity remains modest, with an average Return on Equity (ROE) of 7.27%. This figure suggests limited profitability relative to shareholders’ funds. Additionally, the company faces challenges in servicing its debt, reflected in a high Debt to EBITDA ratio of 2.90 times, which indicates a relatively leveraged balance sheet. Over the past five years, net sales have grown at an annual rate of 14.57%, while operating profit has increased at 12.44%, signalling moderate but steady growth. However, the company’s profitability and operational efficiency have shown signs of stagnation, with flat results reported in the September 2025 quarter.
Valuation Perspective
TVS Srichakra’s valuation is currently rated as fair. The stock trades at an enterprise value to capital employed ratio of 2.1, which is below the average historical valuations of its peers in the Tyres & Rubber Products sector. This discount suggests that the market is pricing in some risk or uncertainty around the company’s future earnings potential. Despite this, the stock has delivered a respectable 17.87% return over the past year as of 30 December 2025. However, this return contrasts with a significant decline in profits, which have fallen by 61.3% over the same period, highlighting a disconnect between market performance and underlying earnings.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend and Profitability
The company’s financial trend is currently flat, reflecting a lack of significant improvement or deterioration in key financial metrics. As of 30 December 2025, the nine-month Profit After Tax (PAT) stands at ₹27.42 crores, representing a decline of 41.67% compared to the previous period. Operating cash flow for the year is at ₹197.33 crores, which is the lowest recorded in recent years, indicating constrained liquidity. Return on Capital Employed (ROCE) for the half year is also at a low 4.91%, underscoring limited efficiency in generating returns from capital investments. These factors collectively point to subdued financial momentum, which tempers investor enthusiasm despite the stock’s positive price performance.
Technical Outlook
From a technical perspective, TVS Srichakra exhibits a mildly bullish trend. The stock’s price movements over the past six months have been encouraging, with gains of 36.36% and a three-month return of 28.77% as of 30 December 2025. However, short-term volatility is evident, with a one-month decline of 12.33% and a one-day drop of 1.77%. This mixed technical picture suggests that while there is underlying strength, investors should remain cautious and monitor price action closely for confirmation of sustained momentum.
Sector and Market Context
Operating within the Tyres & Rubber Products sector, TVS Srichakra is classified as a small-cap company. The sector itself has faced headwinds due to fluctuating raw material costs and competitive pressures. Compared to its peers, TVS Srichakra’s valuation discount and moderate financial performance reflect these broader challenges. The majority of the company’s shares are held by non-institutional investors, which may influence liquidity and trading patterns.
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What the Hold Rating Means for Investors
For investors, the 'Hold' rating on TVS Srichakra Ltd suggests maintaining existing positions rather than initiating new buys or selling holdings. The stock’s fair valuation and average quality imply limited immediate upside, while the flat financial trend and mixed technical signals counsel caution. Investors should closely monitor upcoming quarterly results and sector developments to reassess the stock’s outlook. The current rating reflects a balanced view that the company is neither significantly undervalued nor overvalued, making it suitable for investors with a moderate risk appetite who prefer to wait for clearer directional cues.
Summary
In summary, TVS Srichakra Ltd’s 'Hold' rating as of 11 Nov 2025, supported by a Mojo Score of 55, is justified by its average quality, fair valuation, flat financial trend, and mildly bullish technicals. As of 30 December 2025, the stock has delivered a 17.87% return over the past year despite declining profits and subdued operational metrics. Investors should weigh these factors carefully and consider the stock’s position within the broader Tyres & Rubber Products sector before making investment decisions.
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