Recent Price Movement and Market Context
The stock has declined by 0.98% on the day, aligning with the broader sector's performance. Over the past three trading sessions, Sundrop Brands has experienced a consecutive fall, losing approximately 9.67% in returns. This decline has pushed the share price below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum.
Meanwhile, the broader market has also faced pressure. The Sensex opened lower at 81,794.65, down 385.82 points (-0.47%), and is currently trading at 81,930.85, reflecting a 0.3% decline. The index has been on a three-week losing streak, shedding 4.47% in value. Notably, the Sensex is trading below its 50-day moving average, although the 50DMA remains above the 200DMA, indicating mixed technical signals.
Long-Term Performance and Relative Underperformance
Over the last year, Sundrop Brands has underperformed significantly, delivering a negative return of 30.30%, in stark contrast to the Sensex’s positive 7.97% gain. The stock’s 52-week high was Rs.959.25, highlighting the extent of the recent decline. This underperformance extends beyond the past year, with the company lagging behind the BSE500 benchmark in each of the last three annual periods.
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Financial Metrics and Growth Trends
One of the key factors influencing the stock’s rating is the company’s long-term growth trajectory. Sundrop Brands has experienced a decline in operating profit at an annualised rate of 67.91% over the past five years, which has weighed on investor confidence. Despite this, the company has reported positive results for the last four consecutive quarters, with net sales in the most recent quarter reaching Rs.383.30 crore, representing a growth of 40.6% compared to the previous four-quarter average.
Profit after tax (PAT) for the nine-month period stands at Rs.31.14 crore, indicating an improvement in profitability. The company’s return on equity (ROE) is 2.6%, and it trades at a price-to-book value of 1.6, suggesting a fair valuation relative to its book value. Furthermore, the stock is trading at a discount compared to its peers’ average historical valuations. Over the past year, while the stock price has declined by 30.30%, profits have surged by 1446.1%, resulting in a PEG ratio of 0.1.
Shareholding and Promoter Pledge Concerns
A notable concern for Sundrop Brands is the status of promoter shareholding. Currently, 100% of promoter shares are pledged, a factor that can exert additional downward pressure on the stock price, especially in falling markets. The proportion of pledged holdings has doubled over the last quarter, intensifying this risk. This elevated pledge level may contribute to volatility and limit the stock’s ability to recover swiftly.
Balance Sheet and Debt Position
On a positive note, the company maintains a low average debt-to-equity ratio of 0.04 times, indicating limited leverage and a relatively conservative capital structure. This low debt level may provide some financial flexibility amid challenging market conditions.
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Sector and Industry Positioning
Sundrop Brands operates within the edible oil industry, a sector that has seen varied performance amid fluctuating commodity prices and changing consumer demand patterns. The stock’s current Mojo Score stands at 40.0, with a Mojo Grade of Sell, downgraded from Hold as of 10 September 2025. The market capitalisation grade is rated at 3, reflecting its small-cap status within the sector.
Despite the recent price weakness, the stock’s performance remains in line with sector movements on the day, though it continues to trail behind broader market indices and benchmarks over longer periods.
Summary of Key Price and Performance Indicators
The stock’s new 52-week low of Rs.606.8 represents a significant technical level, underscoring the challenges faced by Sundrop Brands in maintaining upward momentum. The consecutive three-day decline and the breach of all major moving averages highlight the prevailing bearish sentiment. Comparatively, the Sensex’s recent weakness and the sector’s performance provide a broader context for the stock’s movement.
While the company’s financial results show some positive trends in sales and profitability, the long-term growth concerns and high promoter pledge levels remain critical factors influencing the stock’s valuation and market perception.
Conclusion
Sundrop Brands Ltd’s fall to a 52-week low at Rs.606.8 reflects a combination of subdued long-term growth, elevated promoter pledge levels, and consistent underperformance relative to benchmarks. The stock’s technical indicators and recent price action suggest continued caution among market participants. However, the company’s improving quarterly results and low leverage provide a nuanced picture of its current financial health within the edible oil sector.
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