Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating for Supreme Petrochem Ltd indicates a cautious stance for investors, suggesting that the stock may underperform relative to the broader market or its sector peers in the near term. 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, helping investors understand the risks and opportunities associated with the stock.
Quality Assessment
As of 23 February 2026, Supreme Petrochem Ltd holds a 'Good' quality grade. This reflects a stable operational foundation and reasonable business fundamentals. However, despite this positive quality rating, the company’s long-term growth trajectory has been disappointing. Operating profit has declined at an annualised rate of -1.66% over the past five years, signalling challenges in sustaining profitability growth. This sluggish growth undermines the company’s ability to generate consistent shareholder value over time.
Valuation Considerations
The stock is currently classified as 'Expensive' in terms of valuation. Supreme Petrochem Ltd trades at a price-to-book value of 5.6, which is significantly higher than the average valuations of its peers in the petrochemicals sector. This premium valuation is not fully supported by the company’s financial performance, especially given the recent decline in profits. The return on equity (ROE) stands at 12.2%, which, while positive, does not justify the elevated price multiples. Investors should be wary of paying a premium for a stock with deteriorating earnings and uncertain growth prospects.
Financial Trend Analysis
The financial trend for Supreme Petrochem Ltd is decidedly negative. The company has reported a fall in net sales by -6.85%, and its latest results declared in December 2025 were categorised as 'Very Negative'. This marks the third consecutive quarter of negative results, with profit before tax (PBT) excluding other income falling by -56.6% to ₹38.26 crores compared to the previous four-quarter average. Similarly, profit after tax (PAT) declined by -53.8% to ₹35.50 crores. The return on capital employed (ROCE) has also dropped to a low of 18.01%, indicating reduced efficiency in generating returns from capital invested. These trends highlight significant headwinds facing the company’s financial health.
Technical Outlook
From a technical perspective, the stock exhibits a 'Mildly Bullish' grade. Despite the negative fundamental backdrop, recent price movements show some resilience. Over the past month, the stock has gained 30.52%, and year-to-date returns stand at 1.56%. However, this short-term price strength is tempered by longer-term performance metrics, including a 6-month decline of -18.10%. The one-year return is a modest 11.51%, which, while positive, does not fully offset the underlying financial weaknesses. Technical indicators suggest some buying interest but do not provide a strong enough signal to counterbalance the fundamental concerns.
Stock Performance and Market Context
As of 23 February 2026, Supreme Petrochem Ltd’s stock price has experienced mixed returns. The one-day change was -1.09%, while the one-week return was +5.47%. The stock’s performance over three months is slightly negative at -0.65%, and the six-month return shows a significant decline of -18.10%. These fluctuations reflect the market’s uncertainty about the company’s prospects amid challenging financial results and valuation concerns. Investors should consider these factors carefully when evaluating the stock’s potential.
Implications for Investors
The 'Sell' rating suggests that investors should exercise caution with Supreme Petrochem Ltd. The combination of expensive valuation, deteriorating financial trends, and only moderate technical support implies that the stock may face downward pressure in the near term. While the company’s quality remains good, the lack of growth and profitability challenges weigh heavily on its outlook. Investors seeking stable returns or capital appreciation might find better opportunities elsewhere in the petrochemicals sector or broader market.
Our current Stock of the Month is out! This Large Cap from Automobiles - Passenger Cars emerged as the single best opportunity from our elite universe. Get the details now!
- - Current monthly selection
- - Single best opportunity
- - Elite universe pick
Summary
In summary, Supreme Petrochem Ltd’s current 'Sell' rating by MarketsMOJO reflects a cautious outlook based on a thorough analysis of its quality, valuation, financial trends, and technical indicators. The company’s good quality is overshadowed by expensive valuation and very negative financial trends, including declining sales and profits. Although the technical outlook shows some mild bullishness, it is insufficient to offset the fundamental weaknesses. Investors should carefully weigh these factors and consider the risks before committing capital to this stock.
Looking Ahead
Going forward, the company’s ability to reverse its negative financial trends and justify its premium valuation will be critical. Monitoring quarterly results, operational improvements, and sector dynamics will be essential for investors to reassess the stock’s prospects. Until then, the 'Sell' rating serves as a prudent guide for those seeking to manage risk and optimise portfolio performance in the petrochemicals sector.
Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today
