Recent Price Movement and Market Context
The stock has recorded a consecutive two-day decline, with a cumulative return of -2.73% over this period. Despite this, it marginally outperformed its sector by 0.4% today. However, Sukhjit Starch & Chemicals is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained downward momentum.
In contrast, the broader market index, Sensex, opened 285.28 points lower and currently trades at 85,331.00, down 0.35%. Notably, the Sensex remains close to its 52-week high of 85,801.70, just 0.55% away, and is supported by bullish moving averages with the 50-day DMA above the 200-day DMA.
Performance Over the Past Year
Over the last 12 months, Sukhjit Starch & Chemicals has recorded a return of -43.12%, significantly underperforming the Sensex, which has shown a positive return of 10.58% during the same period. The stock’s 52-week high was Rs.324.15, highlighting the extent of the decline to the current low of Rs.150.9.
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Financial Metrics and Profitability Trends
The company’s financial indicators reveal several areas of concern. The Debt to EBITDA ratio stands at 2.52 times, indicating a relatively high level of debt compared to earnings before interest, taxes, depreciation, and amortisation. This ratio suggests limited capacity to comfortably service debt obligations.
Net sales have shown a compound annual growth rate of 14.86% over the past five years, while operating profit has grown at a rate of 10.28% annually during the same period. Despite this, the latest quarterly results reported a decline in operating profit by 24.91%, marking a continuation of negative results for four consecutive quarters.
Profit after tax (PAT) for the latest six months stands at Rs.9.31 crores, reflecting a contraction of 64.69%. Return on capital employed (ROCE) for the half-year is at 6.21%, one of the lowest levels recorded, while the operating profit to interest coverage ratio for the quarter is 2.06 times, indicating limited buffer to cover interest expenses.
Comparative Performance and Valuation
Over the past three years, Sukhjit Starch & Chemicals has consistently underperformed the BSE500 index. The stock’s returns have been negative in each of the last three annual periods, underscoring persistent challenges in generating shareholder value relative to broader market benchmarks.
Despite these challenges, the company’s valuation metrics present a contrasting picture. The ROCE of 5.4 and an enterprise value to capital employed ratio of 0.9 suggest that the stock is trading at a discount relative to its peers’ historical valuations. This valuation reflects market perceptions of risk and the company’s current financial position.
Profitability has also been affected, with profits falling by 57.8% over the past year, aligning with the downward trend in share price.
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Shareholding and Sector Position
Sukhjit Starch & Chemicals operates within the Other Agricultural Products industry and sector. The majority shareholding is held by promoters, which typically indicates concentrated ownership and control.
The stock’s recent performance and valuation metrics reflect the broader challenges faced by companies in this sector, particularly those with elevated debt levels and subdued profitability trends.
Summary of Key Financial Indicators
To summarise, the stock’s key financial indicators include:
- Debt to EBITDA ratio: 2.52 times
- Net sales growth (5 years CAGR): 14.86%
- Operating profit growth (5 years CAGR): 10.28%
- Operating profit decline (latest quarter): -24.91%
- PAT growth (latest six months): -64.69%
- ROCE (half-year): 6.21%
- Operating profit to interest coverage (quarter): 2.06 times
- Return over 1 year: -43.12%
- Profit decline over 1 year: -57.8%
These figures illustrate the financial pressures currently faced by Sukhjit Starch & Chemicals, which have contributed to the stock reaching its 52-week low of Rs.150.9.
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