Vaxfab Enterprises Ltd Upgraded to Hold as Technicals and Valuation Improve

Quality Assessment: Solid Fundamentals Amid Flat Quarterly Performance

Vaxfab Enterprises Ltd operates within the Trading & Distributors sector and continues to demonstrate robust underlying fundamentals despite a subdued quarter. The company reported flat financial performance in Q3 FY25-26, with profit after tax (PAT) falling sharply by 85.6% to ₹0.23 crore compared to the previous four-quarter average. Operating profit before depreciation and interest (PBDIT) also hit a low of ₹0.40 crore, while profit before tax excluding other income (PBT less OI) stood at ₹0.39 crore, marking the lowest levels in recent quarters.

However, the company’s balance sheet remains healthy, with a low average debt-to-equity ratio of 0.09 times, indicating minimal leverage risk. This conservative capital structure supports financial stability and reduces vulnerability to market fluctuations. Furthermore, Vaxfab’s return on capital employed (ROCE) is an impressive 61.8%, underscoring efficient utilisation of capital and strong operational profitability over the long term.

Valuation: Attractive Metrics Support Upgrade

Valuation remains a key factor in the upgrade decision. Vaxfab Enterprises is currently trading at a discount relative to its peers’ historical averages, with an enterprise value to capital employed (EV/CE) ratio of 4.2, which is considered attractive for the sector. The company’s price-to-earnings growth (PEG) ratio stands at a low 0.5, signalling undervaluation relative to its earnings growth potential.

Net sales have grown at an annualised rate of 141.36%, reflecting strong top-line momentum. Over the past year, profits have increased by 75%, further supporting the valuation case. Despite the recent quarterly softness, the company’s long-term growth trajectory remains healthy, justifying a more favourable rating.

Financial Trend: Mixed Signals but Long-Term Growth Prevails

While the recent quarter’s results were disappointing, the broader financial trend for Vaxfab Enterprises remains positive. The company has delivered exceptional returns over the past year, with a stock return of 273.34% compared to the Sensex’s 10.60% over the same period. This outperformance extends to the three-year horizon, where Vaxfab’s returns of 121.08% significantly surpass the Sensex’s 39.74%.

However, the five-year return of -20.29% versus the Sensex’s 67.42% indicates some volatility and challenges in earlier periods. Year-to-date, the stock has gained 19.85%, while the Sensex has declined by 2.26%, signalling renewed investor interest. The company’s ability to sustain this momentum will be critical in future assessments.

Technicals: Upgrade from Mildly Bullish to Bullish

The most significant driver behind the rating upgrade is the improvement in technical indicators. The technical grade has shifted from mildly bullish to bullish, reflecting stronger market sentiment and momentum. Key technical signals include:

• MACD: Weekly remains mildly bearish, but monthly readings are bullish, indicating longer-term upward momentum.
• RSI: Both weekly and monthly readings show no clear signal, suggesting room for further price appreciation without overbought conditions.
• Bollinger Bands: Weekly readings are bullish, with monthly mildly bullish, signalling increasing volatility in favour of upward price movement.
• Moving Averages: Daily moving averages are bullish, supporting short-term positive price trends.
• KST (Know Sure Thing): Weekly mildly bearish but monthly bullish, reinforcing the mixed but improving momentum picture.
• Dow Theory: Weekly shows no trend, but monthly is mildly bullish, indicating a nascent uptrend on a longer timeframe.

On 24 Feb 2026, Vaxfab’s stock price closed at ₹45.10, up 5.62% from the previous close of ₹42.70. The stock’s 52-week high is ₹51.98, while the low is ₹10.83, highlighting significant appreciation over the past year.

Comparative Industry and Market Context

Within the Trading & Distributors sector, Vaxfab Enterprises’ current Mojo Score stands at 51.0, with a Mojo Grade upgraded to Hold from Sell as of 23 Feb 2026. The company holds a Market Cap Grade of 4, reflecting its micro-cap status but with growing investor interest. This upgrade aligns with the company’s improved technical profile and valuation metrics, positioning it favourably against peers.

Despite the recent quarterly earnings softness, the company’s long-term growth rates and market-beating returns over one and three years provide a compelling investment case. Investors should weigh the flat short-term financials against the strong technical momentum and attractive valuation before making decisions.

Outlook and Investor Considerations

Vaxfab Enterprises Ltd’s upgrade to Hold signals cautious optimism. The company’s strong ROCE of 61.8% and low leverage underpin its financial quality, while valuation discounts and a PEG ratio of 0.5 suggest potential upside. The technical upgrade to bullish further supports a positive near-term outlook.

However, investors should remain mindful of the recent quarterly earnings decline and monitor upcoming results for signs of recovery. The stock’s significant gains over the past year have already priced in much of the positive sentiment, so future returns may depend on sustained operational improvements and broader market conditions.

Overall, the upgrade reflects a balanced view that recognises both the risks and opportunities inherent in Vaxfab Enterprises’ current position.

Summary of Rating Change Drivers

• Quality: Strong capital efficiency and low debt despite flat quarterly earnings.
• Valuation: Attractive EV/CE ratio and low PEG ratio relative to peers.
• Financial Trend: Mixed recent results but excellent long-term sales and profit growth.
• Technicals: Upgrade from mildly bullish to bullish with supportive MACD, moving averages, and Bollinger Bands.

Investors looking at Vaxfab Enterprises Ltd should consider these factors in the context of their portfolio strategy and risk tolerance, recognising the company’s potential for recovery and growth balanced against recent earnings volatility.

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