West Coast Paper Mills Ltd Gains 8.39%: Technical Momentum and Valuation Shifts Drive Weekly Rally

2 February 2026: Weak Start Amid Market Decline

West Coast Paper Mills Ltd began the week on a subdued note, closing at Rs.396.30, down 1.33% from the previous Friday’s close of Rs.401.65. This decline occurred alongside a broader market sell-off, with the Sensex falling 1.03% to 35,814.09. The stock’s volume was relatively low at 979 shares, reflecting cautious investor sentiment amid sectoral and macroeconomic uncertainties.

3 February 2026: Recovery Aligns with Market Rally

The stock rebounded on 3 February, gaining 1.05% to close at Rs.400.45, supported by a strong Sensex rally of 2.63% to 36,755.96. Trading volume more than doubled to 2,304 shares, signalling renewed buying interest. This recovery set the stage for the significant gains observed later in the week, as the market environment improved and technical indicators began to shift.

4 February 2026: Intraday High and Strong Outperformance

West Coast Paper Mills Ltd delivered its most notable performance on 4 February, surging 9.01% to close at Rs.436.55. The stock reached an intraday high of Rs.442.25, representing a 10.44% increase from the previous close. This rally far outpaced the Paper & Paper Products sector’s 2.74% gain and the Sensex’s modest 0.37% rise, highlighting the stock’s exceptional intraday resilience.

The day’s trading was marked by elevated volatility, with a weighted average price volatility of 7.53%. The stock’s price moved above its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short- to medium-term strength, although it remained below the 200-day moving average, indicating longer-term resistance.

5 February 2026: Technical Upgrade and Momentum Shift

The positive momentum continued on 5 February, with the stock edging up 0.07% to close at Rs.436.85 on volume of 4,646 shares. More importantly, MarketsMOJO upgraded West Coast Paper Mills Ltd’s Mojo Score from 27.0 (Strong Sell) to 33.0 (Sell), reflecting improvements in technical indicators and valuation metrics despite ongoing financial challenges.

Technical signals showed a nuanced shift: the weekly Moving Average Convergence Divergence (MACD) turned mildly bullish, while the monthly MACD remained bearish. The Relative Strength Index (RSI) was neutral on both weekly and monthly charts, and Bollinger Bands indicated a bullish weekly pattern but mildly bearish monthly trend. The On-Balance Volume (OBV) was mildly bullish, suggesting some accumulation despite the broader downtrend.

Valuation metrics improved from very expensive to expensive, with a price-to-earnings ratio of 15.90 and a price-to-book ratio of 0.81. Enterprise value to EBITDA stood at 5.78, while EV to EBIT was higher at 17.59. The company’s dividend yield was modest at 1.15%, and return on capital employed (ROCE) remained low at 4.24%, signalling limited capital efficiency.

6 February 2026: Week Closes with Slight Pullback

On the final trading day of the week, West Coast Paper Mills Ltd closed at Rs.435.35, down 0.34% from the previous day’s close. The Sensex gained a marginal 0.10% to 36,730.20. Volume was relatively low at 915 shares, indicating a consolidation phase after the week’s strong gains. Despite the slight pullback, the stock ended the week with an impressive 8.39% gain, outperforming the Sensex’s 1.51% rise.

Weekly Price Performance: Stock vs Sensex

Key Takeaways

Positive Signals: West Coast Paper Mills Ltd demonstrated robust short-term price momentum, with an 8.39% weekly gain that outpaced the Sensex by 6.88 percentage points. The intraday surge on 4 February to Rs.442.25 highlighted strong buying interest and technical strength, supported by improved moving averages and mildly bullish weekly MACD and OBV indicators. The upgrade from Strong Sell to Sell by MarketsMOJO reflects a cautious improvement in technical and valuation metrics, signalling potential stabilisation.

Cautionary Notes: Despite recent gains, the stock remains below its 200-day moving average and exhibits mixed technical signals, with monthly MACD and Bollinger Bands indicating longer-term bearishness. Financial fundamentals remain weak, with eight consecutive quarters of losses, declining operating profit, and low return on capital employed. Valuation, while improved, is still classified as expensive relative to financial health. The stock’s long-term returns have underperformed the Sensex over one and three years, underscoring ongoing challenges.

Conclusion

West Coast Paper Mills Ltd’s performance in the week ending 6 February 2026 was marked by a significant price rally and a technical upgrade that tempered previous bearish sentiment. The stock’s ability to outperform the Sensex and its sector amid mixed market signals suggests a tentative shift in momentum. However, persistent financial weaknesses and mixed longer-term technical indicators counsel prudence. Investors should monitor upcoming financial results and sector developments closely to assess whether this technical momentum can translate into sustained recovery.

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