Haryana Leather Chemicals Falls 5.41%: Valuation Shift and Profitability Pressure Shape Week

Monday, 9 February: Stock Opens Lower Despite Sensex Rally

Haryana Leather Chemicals Ltd began the week with a decline of 1.68%, closing at ₹62.00 on 9 February, even as the Sensex surged 1.04% to 37,113.23. The stock’s volume was relatively robust at 2,399 shares, indicating some selling pressure. This divergence suggested early investor caution ahead of the company’s quarterly results.

Wednesday, 11 February: Q3 FY26 Results Highlight Profitability Challenges

The company reported its Q3 FY26 earnings on 11 February, revealing that profitability was under pressure due to a decline in sales. The stock closed at ₹62.24, down 1.44% on the day, while the Sensex inched up 0.13% to 37,256.72. The muted reaction reflected investor concerns over the earnings report, which underscored operational challenges amid a tough market environment.

Thursday, 12 February: Valuation Shift Sparks Modest Recovery

On 12 February, Haryana Leather Chemicals’ stock rebounded 1.62% to close at ₹63.25, its highest level of the week. This followed an announcement that the company’s valuation had shifted from very expensive to fair, with a price-to-earnings ratio moderating to 15.14. The valuation adjustment was supported by a price-to-book value of 0.71 and an EV/EBITDA multiple of 6.98, positioning the stock as more attractively priced relative to peers such as Stallion India and Sanstar Chemicals.

Friday, 13 February: Sharp Decline Amid Mixed Market Returns

The week ended on a weak note for Haryana Leather Chemicals, with the stock plunging 5.69% to ₹59.65 on 13 February. This drop was sharper than the Sensex’s 1.40% decline to 36,532.48, reflecting investor caution despite the valuation shift. The company’s Mojo Score of 20.0 and a Strong Sell grade underscore ongoing concerns about earnings quality and growth prospects. Volume increased to 635 shares, signalling heightened selling interest.

Key Takeaways from the Week

Haryana Leather Chemicals Ltd’s stock performance this week was notably weaker than the broader market, with a 5.41% weekly decline compared to the Sensex’s 0.54% fall. The company’s Q3 FY26 results highlighted declining sales and profitability pressures, which weighed on investor sentiment. However, the valuation adjustment to a fair level, with a P/E of 15.14 and EV/EBITDA of 6.98, suggests improved price attractiveness relative to expensive peers in the commodity chemicals sector.

Despite the more reasonable valuation, the company’s modest returns on capital employed (6.36%) and equity (4.66%) indicate limited operational efficiency. The dividend yield of 1.58% offers some income but is not a significant draw. The Mojo Score of 20.0 and Strong Sell rating reflect ongoing caution due to earnings quality and growth concerns.

Investors should note the stock’s sharp drop on 13 February, which may reflect profit-taking or reaction to mixed market returns and valuation uncertainties. The stock’s trading below book value (P/BV 0.71) could appeal to value investors, but the cyclical nature of the commodity chemicals sector and recent financial pressures warrant careful monitoring.

Conclusion: A Week of Mixed Signals and Caution

Haryana Leather Chemicals Ltd’s week was characterised by a significant stock price decline amid mixed financial results and a valuation reset. While the shift to a fair valuation range improves the stock’s relative price appeal, the underlying profitability challenges and cautious market sentiment have weighed heavily on performance. The Strong Sell Mojo Grade signals that fundamental risks remain, despite the more attractive multiples.

Investors should approach the stock with prudence, balancing the improved valuation against operational headwinds and sector cyclicality. Monitoring upcoming earnings and market developments will be essential to assess whether the stock can stabilise or recover in the near term.

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