Quality Assessment: Mixed Signals Amidst Weak Long-Term Fundamentals
Vivid Global Industries operates within the Commodity Chemicals sector, a space often characterised by cyclical volatility and margin pressures. The company’s quality rating remains cautious due to its weak long-term fundamental strength. Over the past five years, the compound annual growth rate (CAGR) of operating profits has declined by 14.34%, signalling structural challenges in sustaining profitability. Additionally, the company’s average Return on Equity (ROE) stands at a modest 4.84%, indicating limited efficiency in generating shareholder returns.
Further compounding concerns is the company’s weak ability to service debt, with an average EBIT to interest coverage ratio of just 0.75. This suggests that earnings before interest and taxes are insufficient to comfortably cover interest expenses, raising questions about financial resilience in adverse conditions. Despite these weaknesses, the recent quarter showed some improvement, with ROE at 3.9% and positive net profits, hinting at potential stabilisation.
Valuation: Fairly Priced with Discount to Peers
From a valuation standpoint, Vivid Global Industries is trading at a Price to Book (P/B) ratio of 1.1, which is considered fair and slightly discounted compared to its peer group’s historical averages. This valuation metric suggests that the market is pricing the stock conservatively, reflecting the company’s mixed fundamentals but also leaving room for upside if operational performance improves.
The company’s Price/Earnings to Growth (PEG) ratio is 0.5, indicating that earnings growth is favourable relative to the stock price. Over the past year, the stock has delivered a return of 11.47%, outpacing the Sensex’s 10.41% gain during the same period. This relative outperformance, coupled with a 23% rise in profits, supports the view that the stock is reasonably valued and merits a Hold rating rather than a Sell.
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Financial Trend: Positive Quarterly Performance Bolsters Confidence
The upgrade to Hold is strongly supported by Vivid Global’s recent quarterly financial results for Q3 FY25-26, which marked the highest net sales and profits recorded by the company. Net sales reached ₹14.73 crores, while profit before tax (excluding other income) rose to ₹0.09 crores, and net profit after tax stood at ₹0.19 crores. These figures represent a significant improvement and suggest that the company is gaining traction operationally.
While the long-term growth trajectory remains weak, the short-term financial trend is encouraging. The company’s ability to generate positive earnings and improve profitability metrics in the latest quarter has contributed to a more optimistic outlook among analysts, justifying the upgrade from Sell to Hold.
Technical Analysis: Shift to Bullish Momentum Drives Upgrade
The most decisive factor behind the rating change is the marked improvement in technical indicators. Vivid Global’s technical grade has shifted from mildly bullish to bullish, reflecting stronger momentum and positive price action. Key technical signals include:
- MACD (Moving Average Convergence Divergence) is bullish on a weekly basis and mildly bullish monthly, indicating upward momentum in price trends.
- RSI (Relative Strength Index) remains neutral with no strong signals, suggesting the stock is not overbought or oversold.
- Bollinger Bands show bullish patterns on both weekly and monthly charts, signalling increased volatility with upward bias.
- Daily moving averages are bullish, confirming short-term strength in price movement.
- KST (Know Sure Thing) indicator is bullish weekly and mildly bullish monthly, reinforcing positive momentum.
- Dow Theory assessments are mildly bullish on both weekly and monthly timeframes, supporting a constructive medium-term outlook.
These technical improvements have coincided with a strong price performance, with the stock rising 13.34% on the day of the upgrade to close at ₹18.95, near its 52-week high of ₹20.00. The stock’s recent weekly return of 11.08% and monthly return of 11.87% far exceed the Sensex’s respective gains of 0.50% and 0.79%, highlighting robust relative strength.
Comparative Returns and Market Positioning
Despite the positive short-term momentum, Vivid Global’s longer-term returns have lagged behind the broader market. Over three years, the stock has declined by 24.35%, while the Sensex has surged 38.81%. Over five and ten years, the stock’s returns of 0.80% and 68.44% respectively pale in comparison to the Sensex’s 63.46% and 267.00% gains. This underscores the company’s challenges in delivering sustained growth and market outperformance.
Nonetheless, the recent turnaround in quarterly results and technical indicators has prompted a reassessment of the stock’s outlook, leading to the current Hold rating with a Mojo Score of 54.0. The company’s Market Cap Grade remains at 4, reflecting its micro-cap status within the Commodity Chemicals sector.
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Shareholding and Market Dynamics
The majority of Vivid Global’s shares are held by non-institutional investors, which may contribute to higher volatility and less predictable trading patterns. The stock’s recent price action, with a day’s high of ₹19.00 and low of ₹16.77, reflects active trading interest and a positive sentiment shift.
Given the company’s current valuation, improving technicals, and positive quarterly earnings, the Hold rating suggests investors should maintain positions but remain cautious until longer-term fundamentals show sustained improvement.
Outlook and Investment Considerations
In summary, Vivid Global Industries Ltd’s upgrade to Hold is a balanced reflection of its evolving profile. The company’s improved technical momentum and recent financial performance provide a foundation for cautious optimism. However, weak long-term growth, low profitability ratios, and debt servicing challenges temper enthusiasm.
Investors should monitor upcoming quarterly results and sector developments closely. A sustained improvement in operating profit growth and debt metrics would be necessary to warrant a further upgrade to Buy. Until then, the Hold rating appropriately captures the stock’s current risk-reward profile within the Commodity Chemicals sector.
Summary of Ratings and Scores
As of 11 Feb 2026, Vivid Global Industries Ltd holds a Mojo Score of 54.0 with a Mojo Grade of Hold, upgraded from Sell. The Market Cap Grade is 4, reflecting its micro-cap status. Technical grades have improved from mildly bullish to bullish, while financial trend indicators show positive quarterly earnings but weak long-term fundamentals.
Key Metrics at a Glance:
- Current Price: ₹18.95
- 52-Week High/Low: ₹20.00 / ₹12.18
- Net Sales Q3 FY25-26: ₹14.73 crores (highest recorded)
- PBT (excl. other income) Q3 FY25-26: ₹0.09 crores (highest recorded)
- PAT Q3 FY25-26: ₹0.19 crores (highest recorded)
- ROE (latest quarter): 3.9%
- Price to Book Value: 1.1
- PEG Ratio: 0.5
- 5-Year Operating Profit CAGR: -14.34%
- EBIT to Interest Coverage Ratio (avg): 0.75
These figures collectively underpin the rationale for the Hold rating, signalling a stock that is stabilising but not yet poised for a strong buy recommendation.
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