Quality Assessment: Weakening Fundamentals Despite Recent Gains
Vivid Global’s quality metrics have come under pressure, primarily due to its weak long-term fundamental strength. Over the past five years, the company has recorded a negative compound annual growth rate (CAGR) of -14.34% in operating profits, signalling persistent challenges in expanding its core earnings base. This trend is concerning for investors seeking sustainable growth prospects.
Moreover, the company’s ability to service debt remains fragile, with an average EBIT to interest coverage ratio of just 0.75. This indicates that operating earnings are insufficient to comfortably cover interest expenses, raising questions about financial stability in adverse conditions. Return on equity (ROE) further underscores the low profitability, averaging 4.84% over recent years, which is modest compared to industry peers.
However, the latest quarterly results for Q3 FY25-26 show some improvement, with net sales reaching a quarterly high of ₹14.73 crores and profit before tax (excluding other income) at ₹0.09 crores. The company also posted its highest quarterly PAT of ₹0.19 crores, reflecting a 23% rise in profits over the past year. Despite these gains, the overall quality grade remains subdued due to the longer-term structural weaknesses.
Valuation: Fair but Discounted Relative to Peers
From a valuation standpoint, Vivid Global trades at a price-to-book (P/B) ratio of approximately 1, which is considered fair. This valuation is somewhat attractive given the company’s low ROE of 3.9% and the PEG ratio of 0.4, suggesting that the stock is undervalued relative to its earnings growth potential. The discount to peers’ historical valuations may appeal to value-oriented investors looking for turnaround opportunities.
Nonetheless, the company’s market capitalisation grade remains low at 4, reflecting its relatively small size and limited liquidity compared to larger commodity chemical firms. This constrains institutional interest and may contribute to the stock’s subdued performance.
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Financial Trend: Mixed Signals with Recent Profit Growth but Long-Term Underperformance
While the recent quarterly performance indicates a positive trajectory, the broader financial trend remains weak. The company has consistently underperformed the benchmark indices, including the BSE500, over the last three years. Specifically, Vivid Global’s stock has delivered a negative return of -7.07% over the past year, contrasting with the Sensex’s positive 5.37% return in the same period.
Over longer horizons, the disparity is even more pronounced. The stock has declined by 34.23% over three years and 16.79% over five years, while the Sensex has surged 36.26% and 64.00% respectively. Even over a decade, Vivid Global’s 45.53% gain pales in comparison to the Sensex’s 232.80% rise. This persistent underperformance highlights structural challenges in the company’s growth and profitability.
Despite these setbacks, the company’s recent profit growth of 23% year-on-year and a PEG ratio of 0.4 suggest some potential for earnings recovery, though this has yet to translate into sustained stock price appreciation.
Technical Analysis: Downgrade Driven by Shift to Mildly Bullish Trend
The downgrade to Sell was significantly influenced by changes in the technical grade, which shifted from bullish to mildly bullish. Key technical indicators present a mixed picture. On a weekly basis, the MACD remains bullish, supported by a bullish KST (Know Sure Thing) indicator. However, monthly MACD and KST readings have softened to mildly bullish, signalling reduced momentum.
The Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal, indicating a lack of strong directional conviction. Bollinger Bands reveal sideways movement on the weekly chart but a bearish trend monthly, suggesting increased volatility and potential downside risk over the medium term.
Moving averages on the daily chart remain bullish, but the absence of a clear trend in Dow Theory on weekly and monthly timeframes adds to the uncertainty. The On-Balance Volume (OBV) data is inconclusive, providing no definitive clues on buying or selling pressure.
Price-wise, Vivid Global closed at ₹17.10 on 3 February 2026, down 0.47% from the previous close of ₹17.18. The stock’s 52-week range spans ₹12.18 to ₹20.00, with the current price nearer the lower end, reflecting subdued investor sentiment.
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Comparative Performance and Shareholder Structure
Vivid Global’s stock returns have lagged significantly behind the Sensex and BSE500 indices across multiple timeframes, underscoring the company’s challenges in delivering shareholder value. The one-week return was -3.66% versus the Sensex’s 0.16%, and the one-month return was -1.33% compared to the Sensex’s -4.78%, showing some short-term resilience but overall weakness.
The company’s shareholder base is predominantly non-institutional, which may limit the influence of large, strategic investors who often provide stability and long-term support. This ownership structure can contribute to higher volatility and less predictable stock performance.
Conclusion: Downgrade Reflects Caution Amid Mixed Signals
MarketsMOJO’s downgrade of Vivid Global Industries Ltd from Hold to Sell is a reflection of the company’s mixed fundamental and technical profile. While recent quarterly results show encouraging profit growth and fair valuation metrics, the long-term financial trends remain weak, with negative operating profit growth and low returns on equity. The technical indicators have softened from bullish to mildly bullish, signalling caution for momentum investors.
Investors should weigh the company’s discounted valuation and recent earnings improvement against its persistent underperformance relative to market benchmarks and fragile debt servicing capacity. Given these factors, the Sell rating aligns with a prudent approach to risk management in the commodity chemicals sector.
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