CHL Ltd Reports Strong Quarterly Turnaround Amidst Mixed Long-Term Returns

Quarterly Financial Performance: A Positive Shift

CHL Ltd’s latest quarterly results reveal a marked improvement in key financial metrics, signalling a potential inflection point for the company. The financial trend score, which had been negative at -14 over the previous three months, surged to a positive 12 in the December 2025 quarter. This shift reflects a combination of higher sales, improved operating margins, and stronger cash positions.

Net sales for the quarter reached a peak of ₹40.92 crores, the highest recorded in recent periods, underscoring a recovery in demand within the Hotels & Resorts industry. Correspondingly, the company’s Profit Before Depreciation, Interest and Taxes (PBDIT) rose to ₹12.25 crores, also a quarterly high, which translated into an operating profit margin of 29.94%. This margin expansion is particularly noteworthy given the sector’s typical volatility and cost pressures.

Operating profit to interest coverage ratio improved significantly to 2.39 times, indicating enhanced ability to service debt obligations from operating earnings. Additionally, cash and cash equivalents at the half-year mark stood at ₹39.52 crores, the highest level recorded, providing the company with a stronger liquidity buffer to navigate ongoing market uncertainties.

Profitability and Earnings Growth

The company’s Profit Before Tax (excluding other income) reached ₹3.32 crores, while Profit After Tax (PAT) rose to ₹3.97 crores, both quarterly highs. This translated into an Earnings Per Share (EPS) of ₹0.72, signalling improved returns for shareholders. The strong operating performance was partially offset by a high proportion of non-operating income, which accounted for 51.25% of PBT, suggesting that core business profitability remains a critical focus area.

Despite these gains, the company’s Return on Capital Employed (ROCE) for the half-year period was at a low of 10.09%, indicating that capital efficiency has yet to fully recover. Moreover, the debt-equity ratio stood at a negative 2.38 times, reflecting a complex capital structure that may warrant closer scrutiny by investors concerned about leverage and financial risk.

Stock Price and Market Performance

CHL Ltd’s stock price closed at ₹32.72 on 10 Feb 2026, marginally up by 0.31% from the previous close of ₹32.62. The stock traded within a range of ₹30.00 to ₹34.62 during the day, remaining well below its 52-week high of ₹44.60 but comfortably above the 52-week low of ₹25.71. This price action reflects cautious optimism among investors amid the company’s improving fundamentals.

When analysing returns relative to the Sensex, CHL Ltd’s performance is mixed. Over the past week, the stock outperformed the Sensex with a 5.18% gain versus the benchmark’s 2.94%. However, over longer horizons, the stock has lagged behind. Year-to-date, CHL declined by 6.17% compared to the Sensex’s 1.36% fall, and over the past year, the stock dropped 13.46% while the Sensex gained 7.97%. On a more positive note, CHL has delivered robust returns over the medium to long term, with 3-year gains of 81.78% versus the Sensex’s 38.25%, and an impressive 5-year return of 445.33% compared to the Sensex’s 63.78%. The 10-year return of 111.23% trails the Sensex’s 249.97%, highlighting some volatility in the company’s longer-term trajectory.

Analyst Ratings and Market Sentiment

Reflecting the recent financial improvements, CHL Ltd’s Mojo Grade was upgraded from Sell to Strong Sell on 6 Nov 2025, with a current Mojo Score of 17.0. The market capitalisation grade remains modest at 4, indicating a relatively small market cap within its sector. This rating suggests that while the company has made strides in operational performance, significant risks and challenges remain, particularly regarding capital structure and return metrics.

Investors should weigh the positive quarterly momentum against the company’s historical volatility and sector headwinds. The Hotels & Resorts industry continues to face uncertainties from fluctuating travel demand and cost inflation, factors that could impact CHL’s ability to sustain margin expansion.

Outlook and Investor Considerations

CHL Ltd’s recent quarterly performance signals a potential turnaround in its financial health, driven by higher sales, improved operating margins, and stronger liquidity. However, the company’s low ROCE and elevated debt-equity ratio highlight ongoing challenges in capital efficiency and financial leverage. The significant contribution of non-operating income to profits also suggests that core business operations require continued focus to ensure sustainable growth.

From an investment perspective, the stock’s mixed returns relative to the Sensex and its Strong Sell Mojo Grade indicate that caution is warranted. Investors should monitor upcoming quarterly results for confirmation of sustained margin expansion and improvements in capital structure. Additionally, sector dynamics such as travel demand recovery and cost pressures will remain key factors influencing CHL’s performance.

In summary, CHL Ltd presents a complex investment case with encouraging signs of operational recovery tempered by structural financial concerns. A balanced approach, incorporating peer comparisons and sector outlooks, will be essential for investors considering exposure to this Hotels & Resorts company.

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