Kothari Fermentation Faces Severe Financial Struggles Amidst Ongoing Stock Decline

Kothari Fermentation & Biochem, a microcap player in the FMCG sector, has experienced significant volatility, hitting a new 52-week low of Rs. 49.25 today. The stock has been on a downward trajectory, underperforming its sector by 1.36% and marking an 11-day consecutive decline, resulting in a total drop of 24.63% during this period.
In terms of financial performance, Kothari Fermentation reported a substantial decrease in key metrics. The company's profit before tax (PBT) fell to Rs. -0.89 crore, a staggering decline of 293.5% compared to the previous four-quarter average. Similarly, the profit after tax (PAT) plummeted to Rs. -1.12 crore, down 653.1%, while net sales decreased by 16.8% to Rs. 23.75 crore.

The company's long-term fundamentals appear weak, with a compound annual growth rate (CAGR) of -18.47% in operating profits over the last five years. Additionally, a high debt-to-EBITDA ratio of 5.01 times raises concerns about its ability to service debt. Promoter confidence seems to be waning, as they have reduced their stake by 1.52% in the last quarter, now holding 70.14%. Overall, Kothari Fermentation's performance has been below par, with a one-year return of -45.33%, contrasting sharply with the Sensex's -2.40% performance.