Current Price Movement and Market Context
Chemplast Sanmar’s stock price has been under pressure, trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. After a prolonged period of decline spanning ten consecutive days, the stock showed a modest gain today, yet it remains at its lowest level in over a year. The day’s change of 1.14% was in line with the broader commodity chemicals sector’s performance.
Meanwhile, the broader market environment presents a contrasting picture. The Sensex opened flat but later climbed 452.08 points to close at 84,955.52, edging closer to its 52-week high of 85,801.70. The index is trading above its 50-day moving average, which itself is positioned above the 200-day moving average, signalling a generally bullish trend for the market. Small-cap stocks led the gains with the BSE Small Cap index rising by 0.74%.
Despite this positive market backdrop, Chemplast Sanmar’s share price has declined by 41.67% over the past year, significantly underperforming the Sensex, which recorded a 6.19% gain during the same period. The stock’s 52-week high was Rs.527.55, highlighting the extent of the recent price contraction.
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Financial Indicators Reflecting Challenges
The company’s financial data over recent years reveals several areas of concern. Chemplast Sanmar’s debt to EBITDA ratio stands at 4.30 times, indicating a relatively high level of debt compared to earnings before interest, taxes, depreciation, and amortisation. This suggests a constrained capacity to service debt obligations efficiently.
Profitability metrics also point to subdued returns. The average return on equity (ROE) is 9.03%, which is modest and indicates limited profitability generated from shareholders’ funds. Additionally, the company’s net sales have shown a negative compound annual growth rate of 3.77% over the last five years, while operating profit has declined sharply by 154.13% during the same period.
Recent half-year figures show cash and cash equivalents at Rs.569.39 crores, the lowest level recorded, while the debt-to-equity ratio has risen to 0.97 times, the highest in recent periods. Operating profits have been negative, contributing to the stock’s classification as risky relative to its historical valuation levels.
Performance Trends and Comparative Analysis
Over the past year, Chemplast Sanmar’s profits have fallen by 70.7%, a steep decline that aligns with the stock’s 41.67% negative return. The company’s performance has lagged behind the BSE500 index across multiple timeframes, including the last three years, one year, and three months, underscoring a pattern of below-par returns both in the near and longer term.
Despite these challenges, the company exhibits a relatively high return on capital employed (ROCE) of 16.72%, which reflects efficient use of capital in generating earnings before interest and taxes. Institutional investors hold a significant stake of 38.77%, indicating a level of confidence from entities with substantial analytical resources.
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Sector and Market Dynamics
Chemplast Sanmar operates within the commodity chemicals industry, a sector that can be sensitive to fluctuations in raw material costs, regulatory changes, and global demand cycles. While the broader market indices have shown resilience and growth, the company’s stock has not mirrored this trend, reflecting company-specific factors and sector headwinds.
The stock’s current trading below all major moving averages suggests a cautious market stance, with investors awaiting clearer signals before adjusting positions. The recent modest gain after a prolonged decline may indicate some short-term consolidation, but the stock remains at a critical low price point.
Summary of Key Metrics
Chemplast Sanmar’s share price at Rs.286.3 represents a new 52-week and all-time low. The stock’s year-to-date performance shows a decline of 41.67%, contrasting with the Sensex’s positive 6.19% return. Financial indicators such as a debt to EBITDA ratio of 4.30 times, a debt-to-equity ratio nearing 1.0, and negative operating profits highlight ongoing financial pressures. Meanwhile, the company’s ROCE of 16.72% and institutional holding of nearly 39% provide some counterbalance to these challenges.
As the stock remains below all key moving averages and trades at a significant discount to its 52-week high of Rs.527.55, market participants continue to monitor developments within the company and the commodity chemicals sector closely.
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