Viceroy Hotels Ltd is Rated Sell

Current Rating and Its Significance

MarketsMOJO’s 'Sell' rating for Viceroy Hotels Ltd indicates a cautious stance towards the stock, suggesting that investors should consider reducing exposure or avoiding new purchases at this time. This rating reflects a comprehensive assessment of the company’s quality, valuation, financial trend, and technical indicators. While the rating was revised on 29 September 2025, the following analysis is based on the latest data available as of 14 February 2026, ensuring that investors have the most relevant information to guide their decisions.

Quality Assessment: Below Average Fundamentals

As of 14 February 2026, Viceroy Hotels Ltd exhibits below average quality metrics. The company’s long-term fundamental strength remains weak, with an average Return on Capital Employed (ROCE) of just 1.71%. This low ROCE suggests that the company is generating limited returns on the capital invested in its operations, which is a concern for investors seeking efficient capital utilisation.

Additionally, the company’s ability to service its debt is strained, as evidenced by a high Debt to EBITDA ratio of 117.31 times. Such a high leverage ratio indicates significant financial risk, potentially limiting the company’s flexibility to invest in growth or weather economic downturns. This weak fundamental profile weighs heavily on the overall quality grade and contributes to the cautious rating.

Valuation: Very Expensive Despite Discount to Peers

Currently, Viceroy Hotels Ltd is considered very expensive based on valuation metrics. The stock trades at a 3.6 Enterprise Value to Capital Employed (EV/CE) ratio, which is high relative to its own capital returns. However, it is important to note that this valuation is at a discount compared to the average historical valuations of its peers in the Hotels & Resorts sector.

Despite this relative discount, the company’s valuation remains stretched when viewed in isolation, especially given the significant decline in profitability. Over the past year, the stock has delivered an 18.18% return, but profits have fallen sharply by 70.6%. This divergence between stock price performance and earnings decline suggests that the market may be pricing in expectations of recovery or other positive factors, but the current fundamentals do not fully support a premium valuation.

Financial Trend: Flat Performance with No Key Negative Triggers

The financial trend for Viceroy Hotels Ltd is largely flat as of 14 February 2026. The company reported flat results in the September 2025 quarter, with no significant negative triggers emerging from recent financial disclosures. This stability, while not indicative of growth, provides some reassurance that the company is not currently deteriorating further.

However, the flat financial trend combined with weak profitability and high leverage limits the stock’s appeal. Investors should be mindful that without a clear improvement in earnings or cash flow generation, the company’s financial position may remain vulnerable.

Technical Outlook: Mildly Bullish but Cautious

From a technical perspective, Viceroy Hotels Ltd shows a mildly bullish trend. The stock has gained 35.80% over the past six months and 13.54% over the last three months, indicating some positive momentum. The one-year return of 18.18% further supports this technical strength.

Nevertheless, the recent one-day decline of 1.52% and the relatively modest gains over shorter periods suggest that the stock’s momentum is not robust enough to offset the fundamental concerns. Technical indicators alone do not justify a more optimistic rating, but they do provide some support for the current 'Sell' recommendation rather than a more severe stance.

Additional Market Insights

Viceroy Hotels Ltd remains a microcap company within the Hotels & Resorts sector, which often entails higher volatility and liquidity risks. Notably, domestic mutual funds hold no stake in the company as of the current date. Given that mutual funds typically conduct thorough on-the-ground research, their absence may indicate discomfort with the company’s valuation or business prospects at present.

Investors should consider this lack of institutional interest as a factor when evaluating the stock’s risk profile and potential for future appreciation.

What This Rating Means for Investors

For investors, the 'Sell' rating on Viceroy Hotels Ltd signals caution. It suggests that the stock currently carries risks that outweigh its potential rewards based on the company’s quality, valuation, financial trend, and technical outlook. Investors holding the stock may consider trimming their positions, while prospective buyers should carefully evaluate whether the current price adequately compensates for the underlying risks.

Given the company’s weak fundamental profile, expensive valuation relative to returns, flat financial trend, and only mild technical support, the stock does not presently meet the criteria for a more favourable rating. Investors seeking exposure to the Hotels & Resorts sector might look to alternatives with stronger fundamentals and more attractive valuations.

Ultimately, the MarketsMOJO 'Sell' rating reflects a comprehensive, data-driven assessment designed to help investors make informed decisions in a complex market environment.

Summary of Key Metrics as of 14 February 2026

Viceroy Hotels Ltd’s Mojo Score stands at 37.0, reflecting the combined assessment of its quality, valuation, financial trend, and technical grades. The quality grade is below average, valuation is very expensive, financial trend is flat, and technical grade is mildly bullish. Stock returns over various periods show mixed performance, with a notable 18.18% gain over the past year despite a significant 70.6% decline in profits.

These metrics underscore the complexity of the stock’s current position and the rationale behind the 'Sell' rating.

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