Stock Performance and Market Context
The stock has been on a downward trajectory for the past nine consecutive trading sessions, resulting in a cumulative loss of 17.4% over this period. Despite an intraday high of Rs.233.55, representing a 2.59% gain on the day, the closing price settled at the new low of Rs.224.45, reflecting a day-on-day decline of 1.19%. This underperformance is further highlighted by the stock lagging its sector by 3.06% today.
Technical indicators show that Epack Durable is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum. This contrasts with the broader market, where the Sensex rose by 0.43% to close at 82,209.48, edging closer to its 52-week high of 86,159.02, just 4.8% away.
Long-Term Performance and Relative Returns
Over the last year, Epack Durable has delivered a negative return of 48.93%, a stark contrast to the Sensex’s positive 8.31% gain over the same period. The stock’s 52-week high was Rs.483.95, underscoring the extent of the decline. Additionally, the company has underperformed the BSE500 index across multiple timeframes, including the last three years, one year, and three months, indicating persistent challenges in maintaining competitive performance.
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Fundamental Metrics and Financial Health
Epack Durable’s long-term fundamental strength remains subdued, reflected in an average Return on Capital Employed (ROCE) of 6.14%, which is modest relative to industry standards. The company’s net sales have grown at an annualised rate of 12.69% over the past five years, while operating profit has increased at a slower pace of 8.76% annually, indicating limited margin expansion.
Debt servicing capacity is a concern, with a high Debt to EBITDA ratio of 4.51 times, suggesting elevated leverage. Interest expenses have risen by 24.15% over the past nine months, reaching Rs.49.56 crores, which could pressure profitability further.
Recent Quarterly Results
The December quarter results reveal a significant decline in profitability. Profit Before Tax (PBT) excluding other income stood at Rs.2.27 crores, down 73.6% compared to the previous four-quarter average. Similarly, Profit After Tax (PAT) was Rs.2.59 crores, a 74.7% decrease over the same period. These figures highlight a challenging near-term earnings environment.
Promoter Stake and Market Sentiment
Promoter confidence appears to be waning, as evidenced by a reduction in their stake by 0.73% over the previous quarter, now holding 47.18% of the company. Such a decrease may reflect a cautious outlook on the company’s prospects.
Valuation Considerations
Despite the subdued fundamentals, Epack Durable’s valuation metrics suggest some degree of attractiveness. The company’s Enterprise Value to Capital Employed ratio stands at 1.8, indicating that the stock is trading at a discount relative to its peers’ historical valuations. However, this valuation discount accompanies a backdrop of declining profits, which have fallen by 9.5% over the past year.
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Summary of Key Concerns
The stock’s fall to Rs.224.45, its lowest level in 52 weeks, is the culmination of multiple factors including sustained negative returns, underwhelming profitability, rising interest costs, and a reduction in promoter holdings. The company’s financial metrics point to modest growth and profitability, coupled with elevated leverage, which have weighed on investor sentiment and market performance.
While the broader market and sector indices have shown resilience, Epack Durable’s performance has diverged markedly, reflecting company-specific challenges that have persisted over the medium to long term.
Contextual Market Overview
On the day Epack Durable hit its 52-week low, the Sensex demonstrated strength, climbing 317.12 points after a flat opening. Mega-cap stocks led the gains, contrasting with the subdued performance of mid and small caps, including Epack Durable. The Sensex’s 50-day moving average remains above its 200-day moving average, signalling a generally positive market trend, which further highlights the stock’s relative weakness.
Conclusion
Epack Durable Ltd’s recent price action and financial disclosures underscore a period of considerable pressure on the stock. The new 52-week low of Rs.224.45 reflects ongoing challenges in profitability, leverage, and market confidence. The stock’s valuation discount relative to peers is accompanied by declining earnings and a cautious stance from promoters, factors that have contributed to its sustained underperformance against the broader market and sector benchmarks.
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