Understanding the Current Rating
The Strong Sell rating assigned to Umang Dairies indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its sector peers. This recommendation is based on 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 potential as of today.
Quality Assessment
As of 26 December 2025, Umang Dairies exhibits below-average quality metrics. The company’s long-term fundamental strength is weak, with a compounded annual growth rate (CAGR) of operating profits declining at -20.18% over the past five years. This negative growth trend highlights challenges in sustaining profitability and operational efficiency. Additionally, the company’s ability to service its debt is poor, reflected in an average EBIT to interest ratio of -0.24, which suggests that earnings before interest and tax are insufficient to cover interest expenses. The return on equity (ROE) stands at a modest 4.39%, indicating low profitability generated per unit of shareholders’ funds. These quality indicators collectively point to structural weaknesses in the company’s financial health.
Valuation Considerations
From a valuation perspective, Umang Dairies appears risky. The stock trades at an enterprise value to capital employed (EV/CE) ratio of 2.9, which is considered expensive given the company’s flat financial performance. Despite this, the stock is currently trading at a discount relative to its peers’ historical valuations, suggesting some market scepticism has already been priced in. The return on capital employed (ROCE) is 10.2%, which, while not poor, does not justify a premium valuation given the company’s declining profit trends. Investors should be wary of the valuation risks, especially in light of the company’s deteriorating fundamentals.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Umang Dairies is largely flat to negative as of 26 December 2025. The company reported a profit after tax (PAT) of ₹1.68 crores for the latest six months, which represents a sharp decline of -76.14% compared to previous periods. Interest expenses have reached a quarterly high of ₹1.30 crores, further straining profitability. Over the past year, the stock has delivered a negative return of -26.01%, while profits have fallen by -54.5%. These figures underscore the company’s struggles to generate sustainable earnings growth and maintain investor confidence.
Technical Overview
Technically, the stock shows no significant price movement in the short term, with day, week, and month changes all at 0.00%. This stagnation reflects a lack of buying interest or momentum, which often accompanies stocks with weak fundamentals and uncertain outlooks. The absence of positive technical signals reinforces the cautious stance suggested by the fundamental and valuation analyses.
Implications for Investors
For investors, the Strong Sell rating on Umang Dairies serves as a warning to exercise prudence. The combination of weak quality metrics, risky valuation, deteriorating financial trends, and lacklustre technical indicators suggests that the stock may continue to underperform. Investors seeking stable returns or growth opportunities in the FMCG sector might consider alternative stocks with stronger fundamentals and more favourable outlooks.
It is important to note that while the rating was last updated on 23 June 2025, all financial data and performance metrics referenced here are current as of 26 December 2025. This ensures that the analysis reflects the most recent developments and market conditions affecting Umang Dairies.
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Summary
In summary, Umang Dairies’ current Strong Sell rating by MarketsMOJO reflects a comprehensive evaluation of its weak quality fundamentals, risky valuation, flat to negative financial trends, and subdued technical outlook. The stock’s recent performance, including a -21.30% year-to-date return and significant profit declines, further supports this cautious recommendation. Investors should carefully consider these factors before making investment decisions related to Umang Dairies, especially given the competitive and dynamic nature of the FMCG sector.
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