Chambal Fertilisers Declines 2.97% Amid Mixed Technicals and Valuation Shifts

2 February: Mixed Technical Signals Amid Price Momentum Shift

Chambal Fertilisers began the week under pressure, closing at Rs.430.45, down 2.46% on the day, slightly outperforming the Sensex’s 1.03% decline. The stock’s price momentum showed a complex blend of technical indicators, with weekly charts hinting at mild bullishness but monthly trends remaining bearish. The Moving Average Convergence Divergence (MACD) was mildly bullish weekly but bearish monthly, while the Relative Strength Index (RSI) hovered in neutral territory.

Price action remained closer to the 52-week low of Rs.410.15 than the high of Rs.742.45, reflecting ongoing pressure. Volume was moderate at 53,107 shares. The stock’s Mojo Score had recently deteriorated to 47.0, classified as a Sell, reflecting a cautious outlook amid sector headwinds and mixed technical signals.

3 February: Stability Signals Begin to Emerge

The stock price was largely unchanged at Rs.430.35, down a marginal 0.02%, while the Sensex surged 2.63%, highlighting relative weakness in Chambal Fertilisers. Despite this, MarketsMOJO upgraded the stock’s rating from Sell to Hold on 3 February, reflecting stabilising technical indicators and improved valuation metrics.

The upgrade was driven by a shift from bearish to mildly bearish technical trends, with weekly MACD and Know Sure Thing (KST) indicators showing mild bullishness. Valuation grades improved from attractive to fair, with the price-to-earnings (P/E) ratio at 9.26 and price-to-book value (P/BV) at 1.75. The company’s PEG ratio of 0.44 suggested undervaluation relative to earnings growth potential, while dividend yield stood at 2.32%.

4 February: Technical and Valuation Improvements Support Upgrade

On 4 February, Chambal Fertilisers rebounded to Rs.438.05, gaining 1.79%, outperforming the Sensex’s modest 0.37% rise. This price recovery aligned with the upgraded Hold rating, reflecting cautious optimism. The company reported strong Q2 fiscal 2025-26 results, with net sales rising 47.55% year-on-year to Rs.6,412.76 crores and a record PBDIT of Rs.841.73 crores.

Financial metrics remained robust, with cash and cash equivalents reaching Rs.4,990.10 crores and a ROCE of 25.78%. Despite these positives, longer-term growth rates remained subdued, with net sales CAGR at 8.41% over five years and operating profit growth at 2.27%. Institutional investors held a significant 20.31% stake, signalling measured confidence.

5 February: Price Retreat Amid Market Volatility

The stock declined sharply to Rs.427.70, down 2.36%, underperforming the Sensex’s 0.53% fall. Volume increased to 48,476 shares, indicating active trading. The retreat reflected profit-taking after the prior day’s gains and ongoing sector volatility. Technical indicators remained mixed, with daily moving averages bearish and Bollinger Bands signalling continued downside pressure.

6 February: Valuation Metrics Signal Renewed Price Attractiveness

Chambal Fertilisers closed the week at Rs.428.20, up 0.12% on the day but down 2.97% for the week. The stock’s valuation improved further, with the P/E ratio narrowing to 9.20 and P/BV to 1.74, both attractive relative to historical averages and sector peers. The EV/EBITDA multiple stood at 6.42, among the lowest in the fertiliser industry, signalling operational earnings undervaluation.

Return metrics remained strong, with ROCE at 24.47% and ROE at 18.93%, supporting the stock’s fundamental appeal. Despite recent price weakness and underperformance relative to the Sensex, the improved valuation grade from fair to attractive suggests a more favourable risk-reward profile. Dividend yield of 2.34% adds income appeal amid market volatility.

Key Takeaways

Mixed Technical Signals: The week began with a complex technical landscape, featuring mildly bullish weekly momentum indicators but bearish monthly trends. This divergence suggests tentative stabilisation but no clear reversal, warranting caution.

Rating Upgrade Reflects Stabilisation: The upgrade from Sell to Hold by MarketsMOJO on 3 February was driven by improved technical and valuation metrics, signalling a slowing of the downtrend and a more balanced risk profile.

Valuation Improvements Enhance Appeal: The stock’s P/E ratio declined to 9.20 and P/BV to 1.74 by week’s end, positioning Chambal Fertilisers attractively relative to peers. Strong return metrics and a healthy dividend yield support fundamental strength.

Underperformance vs Sensex: Despite valuation gains, the stock underperformed the Sensex by 4.48% over the week, reflecting sector headwinds and market volatility that continue to weigh on near-term sentiment.

Conclusion

Chambal Fertilisers & Chemicals Ltd experienced a challenging week, closing down 2.97% against a Sensex gain of 1.51%. The stock’s technical indicators presented a mixed picture, with stabilising momentum prompting a cautious upgrade from Sell to Hold. Improved valuation metrics, including a P/E ratio of 9.20 and attractive EV/EBITDA multiples, enhanced the stock’s appeal despite ongoing price weakness.

Financially, the company demonstrated strong quarterly performance and efficient capital utilisation, though longer-term growth remains modest. The stock’s underperformance relative to the broader market highlights persistent sector pressures and investor caution. Overall, Chambal Fertilisers currently offers a balanced risk-reward profile, with valuation attractiveness tempered by technical uncertainty and market volatility.

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