Quality Assessment: Mixed Fundamentals with Weak Long-Term Growth
Despite the upgrade, Vivid Global’s fundamental quality remains a concern. The company’s average Return on Equity (ROE) stands at a modest 4.84%, indicating limited profitability relative to shareholders’ funds. The latest quarter reported a slightly improved ROE of 3.9%, but this remains below industry averages. Furthermore, the company’s ability to service debt is weak, with an average EBIT to Interest ratio of just 0.75, signalling potential challenges in covering interest expenses from operating earnings.
Long-term growth metrics also weigh on quality. Operating profits have declined at a compound annual growth rate (CAGR) of -14.34% over the past five years, reflecting structural challenges in the business. This weak fundamental strength tempers enthusiasm despite recent positive quarterly results.
Valuation: Fairly Priced with Discount to Peers
On valuation, Vivid Global trades at a Price to Book (P/B) ratio of 1.1, which is considered fair and slightly discounted relative to its commodity chemicals peers. This valuation level suggests the market is cautious but not overly pessimistic about the company’s prospects. The stock’s Price/Earnings to Growth (PEG) ratio is an attractive 0.3, indicating that earnings growth is not fully priced in by the market.
With a market capitalisation grade of 4, the company is classified as a micro-cap, which often entails higher volatility but also potential for upside if operational improvements materialise. The current share price of ₹18.25 is near its 52-week high of ₹20.00, signalling some recent investor confidence.
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Financial Trend: Positive Quarterly Performance Spurs Confidence
The recent upgrade is strongly supported by Vivid Global’s financial trend, particularly its Q3 FY25-26 results. The company reported its highest-ever quarterly net sales of ₹14.73 crores, alongside a Profit Before Tax (PBT) excluding other income of ₹0.09 crores and a Profit After Tax (PAT) of ₹0.19 crores. These figures represent a meaningful improvement compared to previous quarters and indicate a stabilising business environment.
Profit growth over the past year has been robust at 23%, outpacing the stock’s 14.78% return over the same period. This divergence suggests improving operational efficiency and profitability, which bode well for future earnings momentum. However, the company’s long-term financial trajectory remains challenged by weak operating profit growth and low average ROE.
Technicals: Upgrade from Mildly Bullish to Bullish
The most significant driver behind the rating upgrade is the marked improvement in technical indicators. The technical grade 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.
- Bollinger Bands show bullish trends on both weekly and monthly charts, suggesting price volatility is favouring gains.
- Daily moving averages are bullish, reinforcing short-term strength.
- KST (Know Sure Thing) indicator is bullish weekly and mildly bullish monthly, supporting sustained upward movement.
Other indicators such as RSI (Relative Strength Index) and Dow Theory show no clear signals or mild bullishness, but overall technical sentiment is positive. The stock’s recent price action, with a day change of +1.50% and a current price near ₹18.25, confirms this momentum. The stock has outperformed the Sensex over multiple timeframes, including a 9.28% return in the past week versus the Sensex’s 0.02% and a 14.78% return over one year compared to Sensex’s 10.60%.
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Contextualising the Upgrade: Balancing Strengths and Weaknesses
While the upgrade to Hold reflects improved technicals and recent financial performance, investors should remain cautious given the company’s weak long-term fundamentals. The negative five-year CAGR in operating profits and low EBIT to interest coverage ratio highlight ongoing operational and financial risks. The majority of shareholders are non-institutional, which may affect liquidity and volatility.
Nonetheless, the stock’s valuation discount and positive quarterly earnings growth provide a foundation for potential recovery. The technical momentum suggests that market sentiment is turning more favourable, which could attract further buying interest if sustained.
Investment Outlook and Considerations
For investors, Vivid Global Industries Ltd now represents a stock with a balanced risk-reward profile. The Hold rating indicates that while the stock is no longer a sell, it does not yet warrant a Buy recommendation due to underlying fundamental weaknesses. Monitoring upcoming quarterly results and debt servicing metrics will be crucial to reassess the company’s trajectory.
Given the company’s sector—commodity chemicals—external factors such as raw material prices, regulatory changes, and global demand cycles will also influence performance. The stock’s recent outperformance relative to the Sensex and peers suggests selective interest, but investors should weigh this against the company’s modest profitability and growth challenges.
Summary of Ratings and Scores
As of 23 Feb 2026, Vivid Global’s Mojo Grade was upgraded from Sell to Hold, with a Mojo Score of 54.0. The market capitalisation grade remains at 4, reflecting its micro-cap status. Technical indicators have improved significantly, driving the upgrade, while valuation remains fair and financial trends show early signs of recovery. Quality metrics continue to lag, underscoring the need for cautious optimism.
Conclusion
Vivid Global Industries Ltd’s upgrade to Hold is a reflection of improved technical momentum and encouraging quarterly financial results, balanced against persistent fundamental challenges. Investors should consider this rating as a signal to monitor the stock closely rather than an outright buy recommendation. The company’s ability to sustain earnings growth and improve debt servicing will be key to future upgrades.
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