Current Rating and Its Significance
The Strong Sell rating assigned to Super Tannery Ltd indicates a cautious stance for investors, suggesting that the stock is expected to underperform relative to the broader market and its peers. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment appeal and risk profile.
Quality Assessment
As of 25 December 2025, Super Tannery Ltd’s quality grade is categorised as below average. This reflects concerns about the company’s fundamental strength and operational efficiency. The average Return on Capital Employed (ROCE) stands at 7.13%, which is modest and indicates limited effectiveness in generating returns from its capital base. Additionally, the company’s net sales have grown at an annual rate of 11.11% over the past five years, while operating profit has increased by 14.65% annually. Although these growth rates are positive, they are not sufficiently robust to offset other weaknesses in the business model.
Valuation Perspective
From a valuation standpoint, Super Tannery Ltd is considered very attractive. This suggests that the stock is trading at a price level that may offer value relative to its earnings and asset base. However, attractive valuation alone does not guarantee positive returns, especially when other factors such as financial health and market sentiment are unfavourable. Investors should weigh this valuation benefit against the broader risks highlighted by other parameters.
Financial Trend and Stability
The financial trend for Super Tannery Ltd is currently negative. The company faces challenges in sustaining profitability and managing its debt obligations. The Debt to EBITDA ratio is high at 3.39 times, indicating a significant debt burden relative to earnings before interest, taxes, depreciation, and amortisation. Quarterly performance metrics reveal a decline, with Profit After Tax (PAT) at Rs 0.69 crore falling by 64.9% compared to the previous four-quarter average. Net sales for the latest quarter are at a low Rs 62.15 crore, and Profit Before Tax excluding other income is also at a quarterly low of Rs 0.53 crore. These figures highlight operational stress and reduced earnings capacity.
Technical Analysis
The technical grade for the stock is bearish, reflecting negative market sentiment and price momentum. The stock’s recent price movements show a mixed short-term performance with a 1-day gain of 0.43% and a 1-week gain of 6.12%, but these are overshadowed by longer-term declines. Over the past three months, the stock has fallen by 19.58%, six months by 23.31%, and year-to-date losses stand at 41.19%. The one-year return is similarly negative at -41.53%, underperforming the BSE500 index over multiple time frames. This bearish technical outlook suggests continued downward pressure on the stock price.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Long-Term Fundamental Challenges
Super Tannery Ltd’s long-term fundamentals reveal structural challenges. Despite moderate growth in net sales and operating profit over five years, the company’s ability to generate sustainable returns remains weak. The average ROCE of 7.13% is below industry averages for diversified consumer products, signalling inefficiencies in capital utilisation. Moreover, the company’s high leverage, as indicated by the Debt to EBITDA ratio of 3.39, raises concerns about financial risk and the capacity to service debt, especially in a volatile market environment.
Recent Financial Performance
The latest quarterly results underscore the company’s difficulties. PAT has declined sharply by 64.9% compared to the previous four-quarter average, signalling deteriorating profitability. Net sales for the quarter are at a low of Rs 62.15 crore, while profit before tax excluding other income is also at a quarterly trough of Rs 0.53 crore. These figures suggest that operational pressures and possibly market headwinds are impacting the company’s earnings and cash flow generation.
Stock Price Performance and Market Sentiment
Market sentiment towards Super Tannery Ltd remains subdued, as reflected in its stock price performance. The stock has delivered a negative return of 41.53% over the past year, significantly underperforming the broader BSE500 index. The downward trend extends over multiple time horizons, with losses of 19.58% over three months and 23.31% over six months. While short-term price movements show some recovery, the overall technical outlook remains bearish, indicating that investors remain cautious about the stock’s prospects.
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What This Rating Means for Investors
The Strong Sell rating on Super Tannery Ltd serves as a cautionary signal for investors. It suggests that the stock currently faces significant headwinds across multiple dimensions, including operational quality, financial health, and market sentiment. While the valuation appears attractive, this alone does not offset the risks posed by weak fundamentals and a bearish technical outlook. Investors should carefully consider these factors and their own risk tolerance before taking a position in the stock.
For those holding the stock, the rating implies a need for vigilance and possibly re-evaluating exposure, given the company’s ongoing challenges and underperformance relative to benchmarks. Prospective investors might prefer to await signs of fundamental improvement or a more favourable technical setup before committing capital.
Summary
In summary, Super Tannery Ltd’s current Strong Sell rating reflects a comprehensive assessment of its below-average quality, very attractive valuation, negative financial trend, and bearish technical indicators. The company’s financial metrics as of 25 December 2025 reveal operational difficulties, declining profitability, and significant stock price underperformance. This rating provides a clear indication that the stock is not favoured for investment at this time, highlighting the importance of a cautious and well-informed approach.
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