The brokerage firm Motilal Oswal has turned cautious on select stocks. The firm has given a ‘Sell’ call on these three stocks which include Thermax, Fine Organic Industries, and Relaxo Footwears, indicating challenges in growth, margins, and valuations.
Here’s a look at the three stocks Motilal Oswal believes could face further pressure-
Thermax: Sell with target price of Rs 3,100; downside of 6%
Thermax has received a Sell rating from the brokerage firm, with a target price of Rs 3,100, implying a potential downside of 6% from current levels. According to the brokerage report, the company’s Q4FY25 numbers showed decent growth in revenue and EBITDA, but weak order inflows remain a concern.
The brokerage noted that while the Industrial Product division continues to perform well, the Industrial Infra and Green Solutions segments are still struggling due to cost pressures from older, low-margin projects. “We believe that lower ordering and continued cost pressures from legacy projects will have an impact on execution and profit growth for the company,” the report stated.
Furthermore, the brokerage house has trimmed its FY26 and FY27 estimates by 5% each, expecting a 12% CAGR in revenue and 18% CAGR in PAT over FY25-27. As per the brokerage report, the Key risk factors include slower than expected private capex revival, rising commodity prices, and delays in new orders.
Fine Organic Industries: Sell with target price of Rs 3,660; downside of 12%
Fine Organic Industries has also landed on the brokerage’s Sell list, with a revised target price of Rs 3,660, 12% below the current trading price. As per the brokerage report, the company’s Q4FY25 performance disappointed on all fronts, with EBITDA down 18% YoY and margins under pressure.
The company’s management remains cautious about new contracts, citing policy uncertainties around import duties. According to brokerage house, “Valuations appear expensive for a company with no earnings growth during FY25-27,” as the stock currently trades at about 34x FY27 estimated earnings.
The report forecasts a muted outlook with a CAGR of 4%/-1%/-2% in revenue, EBITDA, and PAT respectively, over FY25-27. Challenges such as delays in new plant commissioning and over utilised existing facilities are expected to drag performance in the near term, added the brokerage firm in its report.
Despite the company’s long term potential in the oleochemicals space, near-term headwinds dominate. “We reiterate our Sell rating on the stock with a TP of Rs 3,660,” the brokerage said.
Relaxo Footwears: Sell with target price of Rs 375; downside of 11%
Relaxo Footwears has been given a Sell call with a target price of Rs 375, indicating an 11% downside. The brokerage firm highlighted that FY25 was a tough year for the footwear major, marked by weak volumes and ongoing restructuring in its distribution model.
According to the brokerage report, “Relaxo Footwears reported another weak quarter with EBITDA declining 7% YoY… as volume (-10% YoY) was impacted by overall muted demand and restructuring.” The report added that while the company is trying to enhance its product mix by focusing more on closed footwear, revival in the core open footwear category is crucial.
The brokerage house has cut its FY26-27 revenue and EBITDA estimates by 2-5%, projecting a CAGR of 8% in revenue and 11% in EBITDA over FY25-27. However, concerns remain over its high valuation currently trading at approx. 45x FY27 earnings, despite the recent stock correction.
“We maintain our Sell rating with a revised TP of Rs 375,” the report said, adding that inflation, distribution shake-up, and intense competition are likely to weigh on growth.