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 to medium 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 of the company’s investment appeal.
Quality Assessment
As of 23 February 2026, Supreme Petrochem’s quality grade is considered below average. This reflects the company’s struggles with consistent profitability and growth. Over the past five years, operating profit has declined at an annualised rate of -1.66%, signalling challenges in sustaining operational efficiency and expansion. Additionally, the company has reported negative results for three consecutive quarters, underscoring ongoing difficulties in its core business operations.
Valuation Perspective
The valuation grade for Supreme Petrochem is fair, but with notable caveats. The stock trades at a price-to-book value of 5.6, which is expensive relative to its peers and historical averages. Despite this premium valuation, the company’s return on equity (ROE) stands at a modest 12.2%, which does not fully justify the elevated price multiple. Investors should be wary of paying a premium for a stock whose profitability metrics are under pressure.
Financial Trend Analysis
The financial trend for Supreme Petrochem is very negative. The latest data as of 23 February 2026 shows a decline in net sales by -6.85%, reflecting weakening demand or operational setbacks. Profit before tax excluding other income (PBT LESS OI) for the latest quarter was ₹38.26 crores, down by -56.6% compared to the previous four-quarter average. Similarly, profit after tax (PAT) fell by -53.8% to ₹35.50 crores. The return on capital employed (ROCE) is at a low 18.01%, indicating diminished efficiency in generating returns from capital invested.
Technical Outlook
Technically, the stock exhibits a mildly bullish trend in the short term. Recent price movements show a 1-day gain of 1.06%, a 1-week increase of 5.31%, and a 1-month surge of 29.67%. However, these gains are tempered by a 6-month decline of -20.14%, reflecting volatility and uncertainty in the stock’s price trajectory. Year-to-date, the stock has gained 2.09%, and over the past year, it has delivered a 14.48% return. While these figures suggest some positive momentum, they are overshadowed by the company’s deteriorating fundamentals.
Investment Implications
For investors, the 'Sell' rating signals caution. The combination of below-average quality, expensive valuation, very negative financial trends, and only mildly bullish technicals suggests that Supreme Petrochem Ltd may face headwinds in delivering sustainable shareholder value. The stock’s premium valuation is not supported by its current profitability or growth metrics, and the recent negative earnings trend raises concerns about near-term performance.
Investors should carefully consider these factors before initiating or maintaining positions in Supreme Petrochem. The rating implies that there may be better opportunities elsewhere in the petrochemicals sector or broader market, where companies demonstrate stronger fundamentals and more attractive valuations.
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Sector and Market Context
Supreme Petrochem operates within the petrochemicals sector, a space often influenced by global commodity prices, supply-demand dynamics, and regulatory factors. The company’s small-cap status adds an additional layer of risk, as smaller firms tend to be more vulnerable to market fluctuations and operational challenges. Compared to sector peers, Supreme Petrochem’s valuation premium is not matched by superior financial performance, which may deter value-conscious investors.
Stock Returns in Perspective
Despite the negative financial trends, the stock has delivered a 14.48% return over the past year as of 23 February 2026. This return, however, contrasts with a -34.6% decline in profits over the same period, highlighting a disconnect between market price and underlying earnings. Such divergence can be attributed to short-term market sentiment or technical factors rather than fundamental strength.
Conclusion
In summary, Supreme Petrochem Ltd’s 'Sell' rating by MarketsMOJO reflects a comprehensive assessment of its current financial health and market position. The rating, last updated on 03 Nov 2025, remains relevant today given the company’s ongoing challenges in profitability, valuation concerns, and mixed technical signals. Investors should approach this stock with caution, recognising the risks inherent in its current profile and considering alternative opportunities with stronger fundamentals and more favourable valuations.
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