Harrisons Malayalam Gains 8.54%: 2 Key Factors Driving the Weekly Rally

9 February: Q3 FY26 Profit Recovery Amid Structural Concerns

Harrisons Malayalam began the week on a cautious note, with its stock price declining 1.18% to close at Rs.159.15, despite the Sensex gaining 1.04% that day. The company reported its Q3 FY26 results, highlighting a profit recovery that masked ongoing structural challenges in its plantation business. The quarterly performance showed a significant turnaround in profitability, but concerns remained about the sustainability of earnings given the sector’s inherent volatility and operational headwinds.

The market’s initial reaction was muted, reflecting investor caution over the long-term outlook despite the positive quarterly numbers. Volume was relatively high at 2,161 shares, indicating active trading interest amid the mixed sentiment.

10 February: Modest Price Recovery on Stable Market Conditions

On 10 February, the stock rebounded modestly by 0.53% to Rs.160.00, marginally outperforming the Sensex’s 0.25% gain. Trading volume dropped sharply to 674 shares, suggesting a quieter session as investors digested the previous day’s results. The slight price increase indicated tentative confidence returning to the stock, supported by the company’s improving financial trend.

11 February: Strong Price Rally on Improving Financial Metrics

The stock surged 3.69% to Rs.165.90 on 11 February, significantly outperforming the Sensex’s modest 0.13% gain. This rally coincided with growing market optimism following the company’s improved quarterly financials, which showed a 107.9% increase in Profit Before Tax excluding other income (PBT LESS OI) to ₹3.93 crores. The stock’s volume was lower at 430 shares, but the price action reflected renewed investor interest in the company’s operational turnaround.

12 February: Upgrade to 'Sell' Rating Spurs Further Gains

On 12 February, Harrisons Malayalam’s stock price rose 1.99% to Rs.169.20, despite the Sensex declining 0.56%. This positive divergence was driven by MarketsMOJO’s upgrade of the company’s rating from 'Strong Sell' to 'Sell' based on improved financial and technical metrics. The upgrade was underpinned by a marked improvement in the financial trend score from -1 to 9 over three months, a record ROCE of 14.97% for the half-year, and a PAT of ₹20.02 crores for the nine months ending December 2025.

However, the upgrade came with cautionary notes regarding the company’s reliance on non-operating income, which accounted for 48.56% of PBT for the quarter, and a high Debt to EBITDA ratio of 4.74 times, indicating elevated leverage risks. Technical indicators showed a mild improvement with weekly MACD turning mildly bullish, although monthly indicators remained bearish. The stock’s volume increased to 1,209 shares, reflecting heightened trading activity following the rating revision.

13 February: Week Closes Strong on Continued Momentum

The week concluded with the stock advancing 3.31% to close at Rs.174.80, its highest level for the week, while the Sensex fell 1.40%. Trading volume was minimal at 30 shares, suggesting limited participation but sustained price strength. The stock’s weekly gain of 8.54% starkly contrasted with the Sensex’s 0.54% decline, underscoring the company’s relative outperformance amid broader market weakness.

Weekly Price Performance: Harrisons Malayalam vs Sensex

Key Takeaways

Positive Signals: Harrisons Malayalam’s 8.54% weekly gain was driven by a strong quarterly profit recovery, with PBT excluding other income more than doubling to ₹3.93 crores. The company’s ROCE reached a record 14.97% for the half-year, and PAT rose to ₹20.02 crores for the nine months ending December 2025. The MarketsMOJO upgrade from 'Strong Sell' to 'Sell' reflects improved financial and technical metrics, including a positive shift in financial trend score and mildly bullish weekly MACD readings.

Cautionary Factors: Despite the upgrade, the company’s reliance on non-operating income, which accounted for nearly half of PBT, raises questions about earnings sustainability. The high Debt to EBITDA ratio of 4.74 times indicates elevated leverage and financial risk. Long-term fundamentals remain weak, with a negative five-year CAGR of -15.88% in operating profits. Technical indicators remain mixed, with monthly MACD and KST still bearish, suggesting lingering downward momentum.

Relative Performance: The stock’s outperformance of the Sensex by over 9 percentage points this week is notable, especially given the broader market’s decline. This divergence highlights the company’s improving operational metrics and market sentiment, although volume trends suggest cautious participation.

Conclusion

Harrisons Malayalam Ltd’s performance this week underscores a tentative recovery phase marked by improved quarterly results and a cautious upgrade in investment rating. The 8.54% price appreciation amid a declining Sensex reflects renewed investor interest driven by operational improvements and stabilising technical indicators. However, structural challenges in the plantation business, reliance on non-core income, and high leverage continue to temper enthusiasm. The current 'Sell' rating signals that while the stock is no longer a strong sell, it remains subject to risks that warrant careful monitoring. Investors should remain attentive to forthcoming quarterly updates and any shifts in the company’s fundamental and technical outlook before considering a change in stance.