Key Events This Week
09 Feb: Technical momentum shifts amid mixed market signals
09 Feb: Downgrade to Strong Sell rating by MarketsMOJO
10 Feb: Bearish momentum confirmed with technical downgrade
12 Feb: Q3 FY26 results show return to profitability amid challenges
09 February 2026: Technical Momentum Shift Amid Mixed Market Signals
On Monday, Lakshmi Mills experienced a notable shift in its technical momentum. The stock closed at Rs.7,350, down 2.13% from the previous close of Rs.7,510, reflecting a bearish intraday move despite earlier optimism. Technical indicators revealed a transition from a mildly bearish to a more bearish stance, with the weekly MACD and KST indicators signalling downside pressure. The daily moving averages turned bearish, reinforcing short-term caution among traders.
While the stock’s long-term performance remains strong, with a five-year return of 311.52%, the recent technical deterioration suggested growing investor caution. The stock traded closer to its 52-week low of Rs.4,900.05 than its high of Rs.10,059, highlighting volatility within the garments and apparels sector.
09 February 2026: Downgrade to Strong Sell Reflects Weak Fundamentals and Bearish Technicals
MarketsMOJO downgraded Lakshmi Mills from a Sell to a Strong Sell rating on the same day, citing deteriorating technical indicators and persistent fundamental weaknesses. Despite some recent financial improvements, the company’s Return on Capital Employed (ROCE) remained low at 0.2%, and valuation metrics, while attractive, were overshadowed by weak long-term growth and poor debt servicing ability.
The downgrade was driven by a combination of bearish technical trends, including a bearish weekly MACD and daily moving averages, alongside subdued valuation appeal and weak institutional interest, with domestic mutual funds holding a negligible 0.01% stake. The company’s average EBIT to interest coverage ratio of 0.72 raised concerns about financial stability, despite a healthy operating profit to interest ratio of 2.87 times in the latest quarter.
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10 February 2026: Bearish Momentum Confirmed with Technical Downgrade
The bearish momentum intensified on Tuesday as Lakshmi Mills closed at Rs.7,388, up 0.52% intraday but still reflecting a fragile recovery. Technical indicators confirmed a shift to outright bearishness, with the daily moving averages remaining below key resistance levels. The weekly MACD and KST oscillators stayed bearish, while the monthly indicators remained mildly bearish, suggesting medium-term uncertainty.
Despite the short-term weakness, the stock’s long-term returns continued to outpace the Sensex, with a 17.79% gain over the past year compared to the benchmark’s 7.97%. However, the stock’s recent underperformance over the past month (-4.37%) contrasted with the Sensex’s modest gains, underscoring the mixed technical and fundamental signals.
12 February 2026: Q3 FY26 Results Show Profitability Returns Amid Operational Headwinds
On Thursday, Lakshmi Mills reported its Q3 FY26 results, signalling a return to profitability despite ongoing operational challenges. Profit Before Tax excluding other income rose by 135.5% to Rs.1.14 crore compared to the previous four-quarter average, while Profit After Tax increased by 139.4% to Rs.2.52 crore. The operating profit to interest ratio improved to 2.87 times, indicating better short-term debt servicing capacity.
These results provided a positive counterpoint to the bearish technical backdrop, suggesting some operational resilience. However, the company’s long-term fundamentals remain weak, with modest sales growth of 9.40% annually over five years and poor capital efficiency metrics.
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Daily Price Performance vs Sensex
| Date | Stock Price | Day Change | Sensex | Day Change |
|---|---|---|---|---|
| 2026-02-09 | Rs.7,350.00 | -2.13% | 37,113.23 | +1.04% |
| 2026-02-10 | Rs.7,388.00 | +0.52% | 37,207.34 | +0.25% |
| 2026-02-11 | Rs.7,598.65 | +2.85% | 37,256.72 | +0.13% |
| 2026-02-12 | Rs.7,600.00 | +0.02% | 37,049.40 | -0.56% |
| 2026-02-13 | Rs.7,600.00 | +0.00% | 36,532.48 | -1.40% |
Key Takeaways
Positive Signals: Lakshmi Mills outperformed the Sensex with a 1.20% weekly gain against a 0.54% decline in the benchmark. The Q3 FY26 results showed a return to profitability with significant growth in PBT and PAT, alongside improved operating profit to interest coverage. The stock’s long-term returns remain robust, with a five-year gain of over 287% outperforming the Sensex.
Cautionary Signals: The downgrade to a Strong Sell rating reflects deteriorating technical momentum and weak fundamentals, including low ROCE and poor debt servicing ability. Technical indicators such as the MACD, KST, and daily moving averages remain bearish, signalling potential downside risk. Institutional interest is minimal, and the stock trades closer to its 52-week low than its high, indicating volatility and uncertainty.
Investors should weigh the recent operational improvements against the prevailing technical weakness and fundamental challenges. The mixed signals suggest a cautious stance is warranted in the near term.
Conclusion
Lakshmi Mills Company Ltd’s week was characterised by a complex interplay of technical deterioration, a downgrade to Strong Sell, and a return to profitability in quarterly results. While the stock managed to outperform the Sensex marginally, the bearish technical momentum and weak long-term fundamentals temper optimism. The company’s operational resilience amid sectoral headwinds offers some encouragement, but the prevailing mixed signals advise prudence. Monitoring key technical levels and fundamental developments will be essential for assessing the stock’s trajectory in the coming weeks.
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