Stock Price Movement and Market Context
On 13 Feb 2026, Nikhil Adhesives Ltd’s share price touched an intraday low of Rs.60.2, representing a sharp drop of 12.49% from previous levels. The stock underperformed its sector by 3.95% and closed the day with a negative change of 5.58%. This decline follows a short-lived recovery over two consecutive days, signalling a reversal in trend. The stock exhibited high volatility, with an intraday weighted average price volatility of 6.8%, and is currently trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating sustained downward momentum.
In contrast, the broader market benchmark, the Sensex, opened lower by 772.19 points and traded at 82,733.09, down 1.13%. Despite this, the Sensex remains within 4.14% of its 52-week high of 86,159.02. The index is positioned below its 50-day moving average, though the 50DMA remains above the 200DMA, suggesting mixed signals for the broader market environment.
Long-Term Performance and Relative Underperformance
Over the past year, Nikhil Adhesives Ltd has delivered a total return of -39.34%, significantly lagging behind the Sensex’s positive 8.66% return over the same period. This underperformance extends beyond the last year, with the stock consistently trailing the BSE500 index across the previous three annual periods. The 52-week high for the stock was Rs.129, underscoring the steep decline to the current low.
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Financial Metrics and Profitability Trends
Examining the company’s financial performance reveals subdued growth and declining profitability. Over the last five years, net sales have grown at a modest annual rate of 8.55%, while operating profit has increased at 17.96% annually. However, recent results have shown a downturn. The latest six-month period recorded a profit after tax (PAT) of Rs.6.74 crores, reflecting a contraction of 30.01% compared to prior periods.
Operating cash flow for the year stands at Rs.6.90 crores, the lowest level recorded, while cash and cash equivalents at half-year mark are also at a low Rs.2.13 crores. These figures highlight tightening liquidity and reduced cash generation capacity.
Valuation and Efficiency Indicators
Despite the challenges, Nikhil Adhesives Ltd demonstrates strong management efficiency. The company’s return on capital employed (ROCE) is notably high at 26.93%, signalling effective utilisation of capital resources. Additionally, the firm maintains a low debt-to-EBITDA ratio of 1.17 times, indicating a comfortable ability to service debt obligations.
Valuation metrics also suggest the stock is trading at a discount relative to its peers. With a ROCE of 15.1 and an enterprise value to capital employed ratio of 2, the company’s valuation appears attractive on a relative basis. Nonetheless, the stock’s profits have declined by 11.9% over the past year, which has weighed on investor sentiment and price performance.
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Shareholding and Market Position
The majority shareholding in Nikhil Adhesives Ltd remains with the promoters, reflecting concentrated ownership. The company operates within the Specialty Chemicals industry, a sector characterised by cyclical demand and competitive pressures. The stock’s Mojo Score currently stands at 38.0, with a Mojo Grade of Sell, downgraded from Hold on 24 Nov 2025. The market capitalisation grade is rated at 4, indicating a smaller market cap relative to larger peers.
Summary of Key Concerns
The stock’s decline to a 52-week low is underpinned by several factors: subdued sales growth, declining profits, reduced cash reserves, and consistent underperformance against benchmark indices. The recent negative returns and volatility further compound the cautious outlook. While management efficiency and debt servicing capacity remain strengths, these have not been sufficient to offset the broader challenges faced by the company.
Market and Sector Comparison
Compared to the broader market and sector, Nikhil Adhesives Ltd’s performance has been notably weaker. The Sensex’s positive returns over the past year contrast sharply with the stock’s negative trajectory. Additionally, the stock’s trading below all major moving averages contrasts with the sector’s relative stability, highlighting the divergence in investor sentiment and performance.
Conclusion
Nikhil Adhesives Ltd’s stock reaching Rs.60.2 marks a significant milestone in its recent price journey, reflecting ongoing challenges in growth and profitability. The stock’s valuation metrics and management efficiency provide some counterbalance, but the prevailing market conditions and financial results have contributed to sustained downward pressure on the share price.
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