Current Rating and Its Significance
MarketsMOJO's 'Sell' rating for Supreme Petrochem Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. 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 stock's potential risk and reward profile.
Quality Assessment
As of 11 February 2026, Supreme Petrochem Ltd holds a 'Good' quality grade. This reflects the company's operational strengths and business fundamentals, including its product portfolio and market position within the petrochemicals sector. Despite this, the quality grade alone is insufficient to offset other concerns, particularly in financial performance and valuation.
Valuation Perspective
The stock is currently rated as 'Expensive' in terms of valuation. Supreme Petrochem Ltd trades at a price-to-book value of 5.5, which is significantly higher than its peers' average historical valuations. This premium valuation suggests that the market has priced in optimistic expectations, which may not be fully supported by the company's recent financial results. Investors should be wary of paying a high price for a stock with weakening fundamentals.
Financial Trend Analysis
The financial trend for Supreme Petrochem Ltd is categorised as 'Very Negative'. The latest data shows a decline in net sales by -6.85%, and the company has reported negative results for three consecutive quarters ending December 2025. Profit before tax excluding other income (PBT LESS OI) for the latest quarter stands at ₹38.26 crores, down by -56.6% compared to the previous four-quarter average. Similarly, profit after tax (PAT) has fallen by -53.8% to ₹35.50 crores. Return on capital employed (ROCE) is at a low 18.01% for the half-year, while return on equity (ROE) is 12.2%, further underscoring the deteriorating profitability and efficiency.
Technical Outlook
The technical grade is assessed as 'Mildly Bearish'. Recent price movements show a mixed performance with a 1-day decline of -0.66%, a 1-week gain of +2.05%, and a 1-month rise of +12.31%. However, longer-term trends are less favourable, with a 3-month decline of -3.02% and a 6-month drop of -12.32%. Year-to-date, the stock is down marginally by -0.25%, and over the past year, it has generated a modest return of +2.70%. This underperformance is notable when compared to the broader market, where the BSE500 index has delivered returns of 10.69% over the same period.
Performance Relative to Market and Peers
Supreme Petrochem Ltd's underperformance relative to the market and its peers is a key factor in the current rating. While the BSE500 index has appreciated by 10.69% in the last year, the stock has lagged significantly, with a negative return of -2.48% when adjusted for profit declines. This divergence highlights the challenges the company faces in maintaining growth and profitability amid sectoral and macroeconomic pressures.
Long-Term Growth Concerns
The company’s operating profit has contracted at an annual rate of -1.66% over the past five years, signalling persistent growth challenges. The recent string of negative quarterly results further emphasises the difficulties in reversing this trend. Investors should consider these factors carefully, as sustained negative financial trends can impact shareholder value and future prospects.
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Implications for Investors
For investors, the 'Sell' rating on Supreme Petrochem Ltd suggests caution. The combination of expensive valuation, deteriorating financial trends, and subdued technical signals indicates that the stock may face headwinds in the near term. While the company's quality remains good, it is currently outweighed by the negative financial momentum and market pricing.
Investors should closely monitor upcoming quarterly results and sector developments to reassess the stock’s outlook. Those holding the stock might consider trimming positions or seeking alternatives with stronger financial health and more attractive valuations. Prospective buyers are advised to wait for clearer signs of financial recovery and valuation correction before initiating new positions.
Summary
In summary, Supreme Petrochem Ltd’s current 'Sell' rating by MarketsMOJO, last updated on 03 November 2025, reflects a comprehensive evaluation of its present-day fundamentals as of 11 February 2026. The stock’s expensive valuation, very negative financial trend, and mildly bearish technical outlook combine to temper enthusiasm despite the company’s good quality standing. This rating serves as a prudent guide for investors navigating the petrochemicals sector amid challenging market conditions.
Company Profile and Market Capitalisation
Supreme Petrochem Ltd operates within the petrochemicals sector and is classified as a smallcap company. Its market position and sector dynamics are important considerations for investors assessing risk and growth potential. The company’s recent performance and valuation metrics should be weighed against sector peers and broader market trends to form a balanced investment view.
Stock Returns Overview
As of 11 February 2026, the stock’s returns show a mixed pattern: a 1-day decline of -0.66%, a 1-week gain of +2.05%, and a 1-month rise of +12.31%. However, the 3-month and 6-month returns are negative at -3.02% and -12.32% respectively. The year-to-date return is slightly negative at -0.25%, while the 1-year return stands at +2.70%. These figures highlight the stock’s volatility and relative underperformance compared to the broader market indices.
Financial Metrics in Detail
The company’s profitability metrics reveal significant challenges. The latest half-year ROCE of 18.01% is the lowest recorded, indicating reduced efficiency in capital utilisation. The ROE of 12.2% combined with a high price-to-book ratio of 5.5 suggests that the stock is trading at a premium despite weakening earnings. The decline in net sales by -6.85% and the sharp falls in quarterly PBT and PAT underscore the financial strain the company is experiencing.
Conclusion
Supreme Petrochem Ltd’s current 'Sell' rating is a reflection of its present-day financial and market realities. Investors should approach the stock with caution, recognising the risks posed by expensive valuation and deteriorating financial trends. Continuous monitoring of the company’s performance and sector developments will be essential for making informed investment decisions going forward.
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