HP Adhesives Ltd Reports Sharp Decline in Quarterly Performance Amid Negative Financial Trend

Quarterly Financial Performance Deteriorates

The latest quarter saw HP Adhesives’ profit after tax (PAT) plunge to ₹1.97 crores, representing a steep decline of 51.9% compared to the average of the preceding four quarters. This sharp fall underscores the challenges the company is facing in maintaining profitability amid rising costs and subdued demand conditions.

Operating profit before depreciation, interest and taxes (PBDIT) also hit a nadir at ₹3.95 crores, the lowest recorded in recent quarters. This contraction in operating earnings has directly impacted the company’s operating profit margin, which shrank to just 6.04% of net sales — a significant drop from previous levels and a clear indicator of margin pressure.

Further compounding the negative trend, profit before tax excluding other income (PBT less OI) declined to ₹1.80 crores, marking the weakest performance in this metric for the company. Earnings per share (EPS) correspondingly fell to ₹0.18, the lowest quarterly EPS recorded in recent history, signalling diminished returns for shareholders.

Financial Trend Shift and Market Reaction

HP Adhesives’ financial trend score has deteriorated markedly, sliding from a neutral -3 to a negative -14 over the past three months. This shift reflects the company’s worsening financial health and has been accompanied by a downgrade in its Mojo Grade from Hold to Sell as of 12 Nov 2025. The current Mojo Score stands at 34.0, reinforcing the cautious stance adopted by analysts.

The company’s market capitalisation grade remains modest at 4, reflecting its mid-tier valuation within the specialty chemicals sector. On 13 Feb 2026, HP Adhesives’ stock price closed at ₹38.51, down 6.82% from the previous close of ₹41.33. The stock’s 52-week high and low stand at ₹63.90 and ₹35.01 respectively, indicating significant volatility over the past year.

Comparative Performance Against Sensex

HP Adhesives’ stock performance has lagged significantly behind the benchmark Sensex across multiple time frames. Over the past week, the stock declined by 3.75%, compared to a modest 0.80% drop in the Sensex. The one-month return for HP Adhesives was down 3.05%, again underperforming the Sensex’s 0.85% decline.

Year-to-date, the stock has fallen 6.51%, while the Sensex has only retreated 2.71%. The disparity is even more pronounced over longer horizons: the stock has lost 38.04% over the past year, in stark contrast to the Sensex’s 8.90% gain. Over three years, HP Adhesives has declined 44.69%, while the Sensex surged 37.20%. This underperformance highlights the company’s struggles relative to broader market gains.

Sectoral and Industry Context

Operating within the specialty chemicals sector, HP Adhesives faces intense competition and margin pressures from fluctuating raw material costs and evolving customer demand patterns. The sector has generally seen mixed results, with some peers managing to expand margins through operational efficiencies and product innovation. However, HP Adhesives’ recent financials suggest it has yet to capitalise on these sectoral tailwinds.

Investors should note that the company’s current financial trajectory contrasts with the broader industry trend, where many players have maintained or improved profitability despite macroeconomic headwinds. This divergence may warrant a cautious approach to HP Adhesives’ stock in the near term.

Outlook and Investor Considerations

Given the pronounced decline in profitability and margin contraction, HP Adhesives faces a challenging environment in the immediate future. The downgrade to a Sell rating by MarketsMOJO reflects concerns over the company’s ability to reverse the negative financial trend without significant operational improvements or market recovery.

Investors should weigh the risks of continued margin pressure and earnings volatility against any potential catalysts that could stabilise or improve performance. The stock’s current valuation and recent price volatility suggest that market participants are pricing in these uncertainties.

While the company’s fundamentals have weakened, the specialty chemicals sector remains dynamic, and any strategic initiatives by HP Adhesives to enhance cost efficiencies or expand into higher-margin product lines could alter the outlook. Close monitoring of upcoming quarterly results and management commentary will be essential for assessing the stock’s trajectory.

Summary

HP Adhesives Ltd’s December 2025 quarter results reveal a clear shift from a flat to a negative financial trend, with key profitability metrics such as PAT, PBDIT, and EPS all registering significant declines. The company’s operating margin has contracted to its lowest level in recent quarters, reflecting heightened cost pressures and subdued sales performance.

Relative to the Sensex and sector peers, HP Adhesives has underperformed markedly, prompting a downgrade in its Mojo Grade to Sell. Investors should approach the stock with caution, considering the company’s current financial challenges and the availability of potentially stronger alternatives within the specialty chemicals space and broader market.

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