The stock of Pioneer Embroideries, a company operating in the Garments & Apparels industry, has been on a declining trajectory for the past three consecutive days, resulting in a cumulative return loss of 11.4% during this period. Today's price of Rs.29.7 represents the lowest level the stock has traded at in the last year, a stark contrast to its 52-week high of Rs.70.66. This decline places the stock well below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling persistent bearish momentum.
In comparison, the broader market has shown resilience. The Sensex opened 284.45 points higher and is currently trading at 85,632.68, marking a 0.52% gain and reaching a new 52-week high. The Sensex's positive performance is supported by mega-cap stocks leading the rally, with the index trading above its 50-day moving average, which itself is positioned above the 200-day moving average, indicating a bullish market environment. This divergence highlights the relative weakness of Pioneer Embroideries against the backdrop of a generally positive market sentiment.
Only 1% make it here. This Large Cap from the Gems, Jewellery And Watches sector passed our rigorous filters with flying colors. Be among the first few to spot this gem!
- - Highest rated stock selection
- - Multi-parameter screening cleared
- - Large Cap quality pick
Examining the company’s longer-term performance, Pioneer Embroideries has recorded a negative return of 35.60% over the past year, in stark contrast to the Sensex’s positive return of 10.38% during the same period. This underperformance extends beyond the last year, with the stock also lagging behind the BSE500 index over the last three years and the recent three-month period. Such trends underscore the challenges faced by the company in maintaining competitive performance within its sector.
Financial metrics reveal further insights into the company’s current state. Over the last five years, the compound annual growth rate (CAGR) of operating profits has been negative 100.00%, indicating a contraction in core profitability. The average return on equity (ROE) stands at 5.94%, which suggests relatively low profitability generated per unit of shareholders’ funds. Additionally, the return on capital employed (ROCE) for the half-year period is recorded at 2.13%, one of the lowest levels observed, reflecting limited efficiency in capital utilisation.
Recent quarterly results also highlight areas of concern. The company’s interest expenses over the latest six months total Rs.4.94 crore, representing a growth of 44.44%. Meanwhile, the profit after tax (PAT) for the most recent quarter is reported at a loss of Rs.3.79 crore, a decline of 859.6% compared to the average of the previous four quarters. These figures point to increased financial burdens and reduced profitability in the near term.
Another factor contributing to the stock’s pressure is the high proportion of promoter shares pledged, which stands at 52.59%. In a declining market, such a level of pledged shares can exert additional downward pressure on the stock price, as forced selling or margin calls may arise if the share price continues to fall.
Considering Pioneer Embroideries ? Wait! SwitchER has found potentially better options in Garments & Apparels and beyond. Compare this micro-cap with top-rated alternatives now!
- - Better options discovered
- - Garments & Apparels + beyond scope
- - Top-rated alternatives ready
Despite these challenges, the stock’s valuation metrics indicate a relatively low enterprise value to capital employed ratio of 0.7, which is below the average historical valuations of its peers. This suggests that the market is pricing the stock at a discount relative to its capital base. However, this valuation is accompanied by a significant decline in profits over the past year, which have fallen by 171.9%, reflecting the company’s ongoing difficulties in generating earnings.
In summary, Pioneer Embroideries’ stock has reached a notable 52-week low of Rs.29.7, reflecting a combination of weak financial performance, increased interest costs, low returns on equity and capital, and a high level of pledged promoter shares. While the broader market and sector indices have shown strength, the company’s stock continues to face downward pressure, as evidenced by its position below all major moving averages and its underperformance relative to key benchmarks.
Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →
