Understanding the Current Rating
The 'Hold' rating assigned to Suryalata Spinning Mills Ltd indicates a neutral stance for investors. It suggests that while the stock may not be an immediate buy, it is not a sell either. Investors should consider holding their existing positions and monitor the company’s performance closely. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals.
Quality Assessment
As of 25 December 2025, the company’s quality grade remains below average. This is primarily due to its weak long-term fundamental strength. The average Return on Capital Employed (ROCE) over recent years stands at 8.07%, which is modest and indicates limited efficiency in generating profits from capital. Furthermore, the company’s net sales have grown at an annual rate of 12.36% over the past five years, but operating profit growth has been subdued at just 2.69% annually. These figures highlight challenges in sustaining robust profitability and growth momentum over the long term.
Valuation Perspective
Despite the below-average quality, Suryalata Spinning Mills Ltd’s valuation is currently very attractive. The stock trades at a low Enterprise Value to Capital Employed ratio of 0.6, signalling that it is priced at a discount relative to its peers’ historical valuations. The company’s ROCE for the half-year period is 9.2%, which supports this valuation attractiveness. Investors looking for value opportunities may find this appealing, especially given the stock’s PEG ratio of zero, reflecting a favourable price-to-earnings growth relationship.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend and Profitability
The company has demonstrated positive financial trends in recent quarters. As of 25 December 2025, Suryalata Spinning Mills Ltd has reported positive results for the last three consecutive quarters. The Profit After Tax (PAT) for the latest six months stands at ₹11.14 crores, reflecting a remarkable growth of 200.27%. Operating profit to interest coverage ratio for the quarter is strong at 11.13 times, indicating comfortable debt servicing capability. The half-year ROCE has also improved to 10.59%, signalling better utilisation of capital in the short term.
Technical Outlook
From a technical perspective, the stock exhibits a mildly bullish trend. The Mojo Score has improved to 53.0, up 10 points from the previous 43, which contributed to the rating change to 'Hold' on 15 Nov 2025. The stock’s recent price movements show a 1.19% gain on the day of 25 December 2025, with a one-week gain of 5.51%. However, the stock has experienced some volatility, with a one-month decline of 1.31% and a six-month decline of 1.17%. Year-to-date returns stand at -2.69%, and the one-year return is -4.60%, indicating underperformance relative to broader indices such as the BSE500 over multiple time frames.
Risks and Considerations
Investors should be mindful of certain risks associated with Suryalata Spinning Mills Ltd. Notably, 35.98% of promoter shares are pledged, which can exert downward pressure on the stock price during market downturns. Additionally, the company’s long-term growth and profitability metrics remain below par, which may limit upside potential in the near term. The stock’s underperformance relative to the BSE500 index over the last three years, one year, and three months further emphasises the need for cautious evaluation.
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What This Rating Means for Investors
The 'Hold' rating on Suryalata Spinning Mills Ltd suggests that investors should maintain their current positions rather than initiate new ones or exit holdings immediately. The stock’s attractive valuation and improving financial trends offer some upside potential, but the below-average quality and risks related to promoter share pledging warrant caution. Investors with a higher risk tolerance and a focus on value investing may find opportunities here, while more conservative investors might prefer to wait for clearer signs of sustained growth and improved fundamentals.
Summary of Key Metrics as of 25 December 2025
- Mojo Score: 53.0 (Hold)
- Market Capitalisation: Microcap segment
- Return on Capital Employed (ROCE): 8.07% (long term average), 9.2% (half-year)
- Net Sales Growth (5 years CAGR): 12.36%
- Operating Profit Growth (5 years CAGR): 2.69%
- Profit After Tax (latest 6 months): ₹11.14 crores, up 200.27%
- Operating Profit to Interest Coverage (quarterly): 11.13 times
- Promoter Shares Pledged: 35.98%
- Stock Returns (1 year): -4.60%
In conclusion, Suryalata Spinning Mills Ltd’s current 'Hold' rating reflects a balanced view of its strengths and weaknesses. While valuation and recent financial improvements are encouraging, the company’s overall quality and long-term growth prospects remain modest. Investors should weigh these factors carefully in the context of their portfolio objectives and risk appetite.
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