Rathi Steel & Power Ltd Falls to 52-Week Low of Rs.21 Amidst Continued Underperformance

Stock Price Movement and Market Context

On 4 Feb 2026, Rathi Steel & Power Ltd’s share price hit Rs.21, the lowest level in the past year, representing a steep drop from its 52-week high of Rs.39.8. The stock underperformed its sector by 1.38% on the day, closing with a day change of -1.04%. Despite a slight recovery after two days of consecutive falls, the stock remains below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained bearish trend.

In contrast, the broader market, represented by the Sensex, opened lower at 83,252.06, down 487.07 points (-0.58%), but later recovered to trade near 83,736.94. The Sensex remains 2.89% below its 52-week high of 86,159.02, with its 50-day moving average positioned above the 200-day moving average, indicating a generally positive medium-term market trend that Rathi Steel & Power Ltd has not mirrored.

Financial Performance and Profitability Metrics

Rathi Steel & Power Ltd’s financial indicators reveal challenges that have contributed to its stock’s decline. The company’s one-year stock performance shows a negative return of -42.33%, starkly contrasting with the Sensex’s positive 6.45% return over the same period. This underperformance extends to longer time frames, with the stock lagging behind the BSE500 index over the last three years, one year, and three months.

The company’s average Return on Equity (ROE) stands at a modest 3.39%, indicating limited profitability generated from shareholders’ funds. Additionally, the Return on Capital Employed (ROCE) is recorded at 7.4%, which, while somewhat attractive, has not translated into sustained stock price appreciation.

Debt and Interest Burden

A critical factor weighing on the stock is the company’s high leverage. The Debt to EBITDA ratio is an elevated 141.19 times, signalling a low capacity to service debt from operational earnings. This heavy debt load is further reflected in the interest expenses, which have surged by 47.49% to Rs.5.59 crores over the latest nine-month period. Such financial strain has likely contributed to investor caution and the stock’s downward trajectory.

Sales Growth and Profit Trends

Over the past five years, Rathi Steel & Power Ltd has recorded a net sales growth rate of 9.28% annually, with operating profit increasing at 18.30% per annum. However, these figures have not been sufficient to offset the broader market pressures and internal financial constraints. The latest six-month period shows a decline in profit after tax (PAT) by 28.46%, down to Rs.3.52 crores, indicating recent profitability pressures.

Inventory management also appears to be a concern, with the inventory turnover ratio for the half-year at a low 9.06 times, suggesting slower movement of stock relative to peers.

Valuation and Comparative Analysis

Despite the challenges, the stock’s valuation metrics present a nuanced picture. The enterprise value to capital employed ratio stands at 1.3, which is considered attractive relative to industry peers. The company’s Price/Earnings to Growth (PEG) ratio is 0.9, reflecting a valuation that is discounted compared to historical averages within the Iron & Steel Products sector.

Majority shareholding remains with non-institutional investors, which may influence liquidity and trading dynamics.

Mojo Score and Market Ratings

Rathi Steel & Power Ltd currently holds a Mojo Score of 37.0, with a Mojo Grade of Sell as of 18 Nov 2025, an upgrade from a previous Strong Sell rating. The market capitalisation grade is rated at 4, reflecting the company’s micro-cap status within the Iron & Steel Products sector. These ratings underscore the cautious stance reflected in the stock’s recent price action and financial performance.

Summary of Key Performance Indicators

To summarise, the stock’s 52-week low of Rs.21 is a culmination of several factors including a significant debt burden, subdued profitability, and underwhelming returns relative to the broader market. While the company has demonstrated some sales and operating profit growth over the medium term, recent declines in profitability and elevated interest expenses have weighed on investor sentiment.

The stock’s valuation metrics suggest it is trading at a discount compared to peers, but this has not yet translated into price support. The majority non-institutional shareholding and persistent trading below all major moving averages further highlight the challenges faced by Rathi Steel & Power Ltd in regaining upward momentum.

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