Suraj Ltd is Rated Strong Sell

Current Rating Overview

MarketsMOJO’s Strong Sell rating for Suraj Ltd indicates a cautious stance towards the stock, signalling significant concerns across multiple evaluation parameters. This rating was assigned on 26 May 2025, when the company’s Mojo Score declined from 37 to 28, reflecting a deterioration in its overall investment appeal. The Strong Sell grade suggests that investors should consider avoiding the stock due to its weak fundamentals, unfavourable valuation, negative financial trends, and subdued technical indicators.

Here’s How Suraj Ltd Looks Today

As of 15 February 2026, Suraj Ltd remains a microcap player in the Iron & Steel Products sector, continuing to face challenges that justify its current rating. The company’s Mojo Score of 28 and corresponding Strong Sell grade reflect a combination of factors that investors need to carefully evaluate before considering any exposure.

Quality Assessment

The quality grade for Suraj Ltd is assessed as average, which indicates that while the company maintains some operational stability, it lacks the robust growth and profitability characteristics that typically attract investors. Over the past five years, the company’s operating profit has declined at an annualised rate of -50.99%, signalling poor long-term growth prospects. This sustained contraction in core earnings undermines confidence in the company’s ability to generate consistent returns.

Valuation Considerations

Currently, Suraj Ltd is considered expensive relative to its capital employed, with an enterprise value to capital employed ratio of 2.5. Despite this, the stock trades at a discount compared to its peers’ historical valuations, which may reflect market scepticism about its future prospects. The company’s return on capital employed (ROCE) stands at a low 4.5%, further emphasising the disconnect between valuation and profitability. Investors should note that an expensive valuation combined with weak returns often signals limited upside potential and heightened risk.

Financial Trend Analysis

The financial grade for Suraj Ltd is negative, underscoring deteriorating fundamentals. The company has reported negative results for four consecutive quarters, with the latest six-month profit after tax (PAT) at ₹2.21 crores, reflecting a steep decline of -83.67%. Similarly, profit before tax excluding other income (PBT less OI) for the quarter is ₹1.33 crores, down by -85.79%. These figures highlight a troubling trend of shrinking profitability. Additionally, the half-year ROCE is at a low 6.94%, indicating inefficient capital utilisation. Over the past year, the stock has delivered a return of -44.88%, significantly underperforming the broader market, which has gained 11.06% over the same period.

Technical Outlook

Technically, Suraj Ltd’s grade is mildly bearish. The stock’s recent price movements show a downward trajectory, with a 3-month decline of -14.75% and a 6-month fall of -32.54%. The year-to-date return is also negative at -9.60%. These trends suggest weak investor sentiment and limited buying interest, which may continue to pressure the stock price in the near term.

Market Performance in Context

Suraj Ltd’s underperformance relative to the BSE500 index is notable. While the broader market has generated positive returns of 11.06% over the last year, Suraj Ltd’s stock has declined by nearly 45%. This divergence emphasises the stock’s challenges and the risks associated with holding it in a portfolio seeking growth or capital preservation.

What the Strong Sell Rating Means for Investors

For investors, the Strong Sell rating on Suraj Ltd serves as a clear cautionary signal. It reflects a consensus view that the stock currently carries significant downside risk and is unlikely to deliver satisfactory returns in the near to medium term. The combination of weak financial performance, expensive valuation relative to returns, and negative technical momentum suggests that the company faces structural challenges that may take considerable time to resolve.

Investors should carefully consider these factors before initiating or maintaining positions in Suraj Ltd. The rating implies that capital preservation should be prioritised, and alternative investment opportunities with stronger fundamentals and more favourable valuations may be more suitable for risk-averse portfolios.

Sector and Market Context

Operating within the Iron & Steel Products sector, Suraj Ltd’s struggles are compounded by broader industry pressures, including fluctuating raw material costs and demand uncertainties. While some peers may be navigating these challenges more effectively, Suraj Ltd’s financial and operational metrics lag behind sector averages, further justifying the cautious stance.

Summary of Key Metrics as of 15 February 2026

- Mojo Score: 28 (Strong Sell)
- Market Capitalisation: Microcap
- Operating Profit Growth (5 years annualised): -50.99%
- PAT (Latest 6 months): ₹2.21 crores, down -83.67%
- PBT less Other Income (Quarterly): ₹1.33 crores, down -85.79%
- ROCE (Half Year): 6.94%
- Enterprise Value to Capital Employed: 2.5
- Stock Returns (1 Year): -44.88%
- BSE500 Returns (1 Year): +11.06%

These figures collectively illustrate the challenges Suraj Ltd faces and underpin the Strong Sell rating assigned by MarketsMOJO.

Looking Ahead

While the current outlook remains negative, investors should monitor any changes in Suraj Ltd’s operational performance, profitability trends, and valuation metrics. Improvements in these areas could warrant a reassessment of the rating in the future. Until then, the Strong Sell recommendation advises caution and suggests that investors seek more stable and promising opportunities elsewhere.

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