Super Tannery Ltd is Rated Strong Sell

Current Rating and Its Significance

The Strong Sell rating assigned to Super Tannery Ltd indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its peers. This recommendation is based on a detailed analysis of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the company’s investment potential and risk profile.

Quality Assessment

As of 30 January 2026, Super Tannery Ltd’s quality grade is categorised as below average. This reflects concerns about the company’s operational efficiency and profitability metrics. The average Return on Capital Employed (ROCE) stands at 7.13%, which is modest and suggests 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 implies 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 a positive investment outcome, especially when other fundamental and technical factors are unfavourable. Investors should weigh this valuation benefit against the broader risks highlighted by the company’s financial and technical profiles.

Financial Trend Analysis

The financial trend for Super Tannery Ltd is currently negative. The latest quarterly data shows a significant decline in profitability, with Profit After Tax (PAT) falling by 64.9% to ₹0.69 crore compared to the previous four-quarter average. Net sales for the quarter are at their lowest level of ₹62.15 crore, and Profit Before Tax excluding other income (PBT less OI) has dropped to ₹0.53 crore. The company also faces challenges in servicing its debt, with a high Debt to EBITDA ratio of 3.39 times, indicating elevated leverage and potential liquidity risks.

Technical Outlook

Technically, the stock is graded as bearish. This is supported by recent price movements and trend indicators. Despite a one-day gain of 4.35% and a one-week rise of 8.36%, the stock has experienced negative returns over longer periods: -5.54% in one month, -13.25% in three months, -28.00% in six months, and a steep -39.72% over the past year. The year-to-date return also stands at -6.09%. These figures highlight sustained downward momentum, which is a critical consideration for investors evaluating entry or exit points.

Performance Relative to Benchmarks

Super Tannery Ltd’s performance has lagged behind key market indices such as the BSE500 over the last one, three, and twelve months. This underperformance underscores the stock’s challenges in delivering shareholder value compared to the broader market. The weak long-term fundamental strength combined with deteriorating financial metrics and bearish technical signals justifies the current Strong Sell rating.

Implications for Investors

For investors, the Strong Sell rating suggests a high level of caution. It indicates that the stock is likely to continue facing headwinds and may not be suitable for those seeking capital appreciation or stable income in the near term. The combination of below-average quality, negative financial trends, and bearish technicals outweighs the appeal of its attractive valuation. Investors should consider these factors carefully and may prefer to explore alternative opportunities with stronger fundamentals and more positive outlooks.

Summary of Key Metrics as of 30 January 2026

The latest data presents a challenging outlook for Super Tannery Ltd. The company’s microcap status within the diversified consumer products sector adds to the volatility and risk profile. The Mojo Score currently stands at 17.0, reflecting a significant decline from the previous score of 32. This drop aligns with the shift from a ‘Sell’ to a ‘Strong Sell’ rating on 18 November 2025. The stock’s recent price volatility, including a 4.35% gain on the latest trading day, does little to offset the broader negative trend.

Debt and Profitability Concerns

High leverage remains a critical concern. The Debt to EBITDA ratio of 3.39 times indicates that the company’s earnings before interest, taxes, depreciation, and amortisation are insufficiently robust to comfortably cover its debt obligations. This financial strain is compounded by the sharp decline in quarterly PAT and subdued sales figures, which may limit the company’s ability to invest in growth or weather market downturns.

Investor Takeaway

Investors should interpret the Strong Sell rating as a signal to reassess their exposure to Super Tannery Ltd. While the valuation appears attractive, the underlying quality and financial health of the company present significant risks. The bearish technical outlook further suggests that the stock may continue to face downward pressure in the near term. A cautious approach, including close monitoring of quarterly results and debt servicing capability, is advisable for current and prospective shareholders.

Conclusion

In conclusion, Super Tannery Ltd’s current Strong Sell rating by MarketsMOJO is well supported by its below-average quality, negative financial trends, bearish technical indicators, and despite a very attractive valuation. The rating, updated on 18 November 2025, remains relevant today as of 30 January 2026, reflecting the company’s ongoing challenges and the risks it poses to investors. Those considering this stock should weigh these factors carefully against their investment objectives and risk tolerance.

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