Stock Performance and Market Context
On 8 January 2026, Aarti Surfactants Ltd’s share price slipped to Rs.375.25, the lowest level in the past year. This decline comes after five consecutive days of losses, during which the stock has fallen by 3.49%. The day’s performance also saw the stock underperform its sector by 1.72%, signalling relative weakness within Specialty Chemicals.
The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, underscoring the prevailing bearish momentum. In contrast, the broader market index, Sensex, opened lower by 183.12 points and was trading at 84,774.62, down 0.22%. Notably, the Sensex remains just 1.63% shy of its 52-week high of 86,159.02, highlighting a divergence between the benchmark and Aarti Surfactants’ performance.
Long-Term Performance and Relative Underperformance
Over the last twelve months, Aarti Surfactants Ltd has delivered a negative return of 41.33%, a stark contrast to the Sensex’s positive 8.44% gain over the same period. The stock’s 52-week high was Rs.651, indicating a substantial erosion in value. This underperformance extends beyond the past year, with the company consistently lagging behind the BSE500 index in each of the last three annual periods.
The company’s Mojo Score currently stands at 43.0, with a Mojo Grade of ‘Sell’, an improvement from a previous ‘Strong Sell’ rating as of 19 September 2025. The Market Cap Grade is rated 4, reflecting its mid-tier market capitalisation within the sector.
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Financial Metrics and Profitability Indicators
Aarti Surfactants Ltd’s financial profile reveals several areas of concern. The company’s Debt to EBITDA ratio stands at 2.98 times, indicating a relatively high leverage level and a constrained ability to service debt efficiently. This metric is a key factor in the current ‘Sell’ grading.
Profitability metrics also reflect modest returns. The average Return on Equity (ROE) is 9.11%, signalling limited profitability generated per unit of shareholders’ funds. Additionally, the company’s operating profit has declined at an annualised rate of 8.49% over the past five years, pointing to subdued long-term growth prospects.
Recent Operational and Sales Performance
Despite the broader challenges, the company has reported positive results for the last three consecutive quarters. The latest six-month period saw a Profit After Tax (PAT) of Rs.4.50 crore, representing a growth of 196.37%. Net sales for the same period increased by 34.26% to Rs.395.07 crore, indicating an expansion in revenue streams.
The Debtors Turnover Ratio for the half-year is notably high at 10.35 times, suggesting efficient collection of receivables. The Return on Capital Employed (ROCE) is recorded at 9.1%, and the Enterprise Value to Capital Employed ratio stands at 1.2, reflecting an attractive valuation relative to capital utilisation.
Valuation and Market Position
From a valuation standpoint, Aarti Surfactants Ltd is trading at a discount compared to its peers’ average historical valuations. The company’s Price/Earnings to Growth (PEG) ratio is 1.3, which, while not indicative of strong growth, suggests a valuation aligned with its earnings trajectory. Over the past year, profits have risen by 16.9%, despite the stock’s negative return of 41.33%.
Promoters remain the majority shareholders, maintaining significant control over the company’s strategic direction.
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Summary of Key Concerns
The stock’s fall to a 52-week low is underpinned by a combination of factors including sustained underperformance relative to benchmarks, high leverage as indicated by the Debt to EBITDA ratio, and modest profitability metrics. The decline in operating profit over the last five years further compounds concerns about the company’s growth trajectory.
While recent quarters have shown positive earnings and sales growth, these have not translated into improved market performance or investor confidence, as reflected in the stock’s price action and relative weakness against sector peers and the broader market.
Market and Sector Dynamics
The Specialty Chemicals sector, in which Aarti Surfactants operates, has experienced mixed performance, with some stocks maintaining resilience while others face valuation pressures. The Sensex’s proximity to its 52-week high contrasts with Aarti Surfactants’ declining share price, highlighting sector-specific and company-specific challenges.
Technical Indicators
Technical analysis shows the stock trading below all major moving averages, a signal often interpreted as bearish. The continuous five-day decline and the failure to hold above short-term averages suggest persistent selling pressure. This technical backdrop aligns with the fundamental concerns and the company’s current Mojo Grade of ‘Sell’.
Conclusion
Aarti Surfactants Ltd’s recent drop to Rs.375.25 marks a significant milestone in its share price journey, reflecting a complex interplay of financial metrics, market sentiment, and sector dynamics. The stock’s performance over the past year and its relative position against benchmarks underscore the challenges faced by the company in maintaining investor confidence and market valuation.
While the company has demonstrated some positive financial results in recent quarters, these have yet to reverse the broader trend of underperformance and valuation pressures. The current data points to a cautious outlook on the stock’s near-term market behaviour.
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