Understanding the Current Rating
The Strong Sell rating assigned to Chemplast Sanmar Ltd indicates a cautious stance for investors, signalling significant concerns about the company’s near-term prospects. This rating is derived from a detailed analysis of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s risk and potential return profile.
Quality Assessment
As of 28 February 2026, Chemplast Sanmar’s quality grade is classified as average. This reflects moderate operational efficiency and profitability metrics. The company’s Return on Equity (ROE) averages 9.03%, which is relatively low, indicating limited profitability generated per unit of shareholder funds. Additionally, the firm’s ability to service debt is constrained, with a high Debt to EBITDA ratio of 4.30 times. This elevated leverage ratio suggests financial strain and potential vulnerability to interest rate fluctuations or economic downturns.
Valuation Perspective
The valuation grade for Chemplast Sanmar is currently deemed risky. The stock trades at levels that imply heightened uncertainty compared to its historical averages. Investors should note that the company’s operating profits have turned negative, a critical red flag for valuation. Over the past year, the stock has delivered a return of -40.82%, while profits have declined sharply by -230.6%. Such a combination of poor earnings performance and negative returns underscores the elevated risk embedded in the stock’s current price.
Financial Trend Analysis
The financial trend for Chemplast Sanmar is negative, reflecting deteriorating business fundamentals. Net sales have contracted at an annualised rate of -6.66% over the last five years, while operating profit has plunged by -164.18% in the same period. The latest quarterly results reveal a loss after tax (PAT) of ₹-119.20 crores, representing a steep fall of -118.4% compared to the previous four-quarter average. Operating profit to interest coverage ratio is also troubling, standing at -0.97 times, indicating the company is not generating sufficient earnings to cover interest expenses. Cash and cash equivalents have dwindled to ₹569.39 crores as of the half-year mark, further highlighting liquidity concerns.
Technical Outlook
From a technical standpoint, the stock exhibits a mildly bearish trend. Recent price movements show consistent underperformance relative to the broader market benchmarks. Over the last one day, the stock declined by 5.55%, with a one-week loss of 16.47% and a three-month drop of 15.73%. The six-month performance is particularly weak, with a decline of 42.82%. Year-to-date, the stock has fallen 8.07%, and over the past year, it has underperformed the BSE500 index in each of the last three annual periods. This persistent underperformance signals weak investor sentiment and limited technical support at current levels.
Implications for Investors
For investors, the Strong Sell rating suggests that Chemplast Sanmar Ltd currently carries significant downside risk. The combination of average operational quality, risky valuation, negative financial trends, and bearish technical signals points to a challenging environment for the stock. Investors should carefully consider these factors before initiating or maintaining positions, as the company faces headwinds that may continue to pressure its share price.
Sector and Market Context
Operating within the commodity chemicals sector, Chemplast Sanmar faces cyclical pressures and competitive challenges that have contributed to its recent performance. The small-cap stock’s struggles contrast with broader market indices, which have shown more resilience. This divergence emphasises the importance of sector-specific dynamics and company fundamentals in shaping investment decisions.
Summary of Key Metrics as of 28 February 2026
- Mojo Score: 23.0 (Strong Sell grade)
- Debt to EBITDA Ratio: 4.30 times (high leverage)
- Return on Equity (avg): 9.03%
- Net Sales Growth (5 years): -6.66% annually
- Operating Profit Growth (5 years): -164.18%
- Latest Quarterly PAT: ₹-119.20 crores
- Operating Profit to Interest Coverage (Q): -0.97 times
- Cash and Cash Equivalents (HY): ₹569.39 crores
- Stock Returns: 1Y -40.82%, 6M -42.82%, 3M -15.73%
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Investor Considerations and Outlook
Given the current rating and underlying data, investors should approach Chemplast Sanmar Ltd with caution. The company’s financial health is under pressure, and the stock’s valuation reflects these challenges. While the average quality grade suggests some operational stability, the negative financial trends and technical weakness outweigh this. Investors seeking exposure to the commodity chemicals sector might consider alternative opportunities with stronger fundamentals and more favourable technical setups.
Conclusion
Chemplast Sanmar Ltd’s Strong Sell rating by MarketsMOJO, last updated on 05 Feb 2026, is supported by a comprehensive analysis of current data as of 28 February 2026. The stock’s combination of risky valuation, negative financial trends, and bearish technical indicators presents a challenging investment case. For investors, this rating serves as a clear signal to reassess exposure and prioritise risk management in their portfolios.
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