Recent Price Movement and Market Context
On 5 January 2026, Suraj Ltd’s shares opened sharply lower with an 8.14% gap down, touching an intraday low of Rs.225.05, the lowest level in the past year. This decline extends a four-day losing streak during which the stock has fallen by 2.59%. The day’s performance underperformed the Iron & Steel Products sector by 0.87%, signalling relative weakness within its industry group.
The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, underscoring the prevailing bearish momentum. In contrast, the broader market, represented by the Sensex, opened slightly lower at 85,640.05 points but remains close to its 52-week high of 86,159.02, trading above its 50-day and 200-day moving averages. Small-cap stocks are leading the market rally, with the BSE Small Cap index gaining 0.13% today, highlighting a divergence from Suraj Ltd’s performance.
Financial Performance and Valuation Concerns
Suraj Ltd’s financial results have been under pressure, contributing to the stock’s weak performance. The company reported a decline in net sales by 11.39% in the September 2025 quarter, marking the third consecutive quarter of negative results. Operating profit growth has been negative over the last five years, with an annualised decline of 1.03%, indicating challenges in sustaining profitability.
Operating cash flow for the year has reached a low of Rs. -9.01 crores, reflecting cash generation difficulties. Interest expenses for the nine months ended have increased by 49.82% to Rs.4.06 crores, adding to financial strain. Profit before tax excluding other income for the quarter fell sharply by 96.53% to Rs.0.24 crores, signalling a significant erosion in core earnings capacity.
The company’s return on capital employed (ROCE) stands at 4.5%, which, combined with an enterprise value to capital employed ratio of 2.7, suggests an expensive valuation relative to its earnings and capital efficiency. Despite this, the stock trades at a discount compared to its peers’ historical valuations, reflecting market scepticism about its growth prospects.
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Comparative Performance and Market Position
Over the past year, Suraj Ltd’s stock has declined by 52.39%, a stark contrast to the Sensex’s gain of 8.15% and the BSE500’s 5.88% return. This underperformance highlights the stock’s relative weakness within the broader market and its sector. The 52-week high for Suraj Ltd was Rs.522, indicating a substantial erosion in market value over the last twelve months.
The company’s Mojo Score currently stands at 20.0, with a Mojo Grade of Strong Sell, downgraded from Sell on 4 April 2025. This rating reflects the deteriorated financial health and subdued growth outlook. The market capitalisation grade is 4, indicating a relatively modest market cap within its sector.
Shareholding and Sectoral Context
Promoters remain the majority shareholders of Suraj Ltd, maintaining control over the company’s strategic direction. The Iron & Steel Products sector itself has seen mixed performance, with some peers maintaining stronger financial metrics and valuations. Suraj Ltd’s discounted valuation relative to peers may reflect concerns about its earnings trajectory and capital efficiency.
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Summary of Key Financial Metrics
To summarise, Suraj Ltd’s recent financial and market data reveal several points of concern:
- Net sales declined by 11.39% in the latest quarter.
- Operating profit has contracted at an annualised rate of 1.03% over five years.
- Operating cash flow is negative at Rs. -9.01 crores for the year.
- Interest expenses have increased by nearly 50% over nine months.
- Profit before tax excluding other income fell by 96.53% in the recent quarter.
- Return on capital employed remains low at 4.5%.
- Stock price has halved over the past year, falling from Rs.522 to Rs.225.05.
These factors collectively contribute to the stock’s current valuation and market sentiment.
Market Environment and Sectoral Trends
While Suraj Ltd faces headwinds, the broader market environment shows resilience. The Sensex remains near its 52-week high and trades above key moving averages, signalling a generally bullish trend. Small-cap stocks are leading gains, which contrasts with Suraj Ltd’s performance as a mid-sized player in the Iron & Steel Products sector. This divergence emphasises the selective nature of market advances and the challenges faced by certain companies within cyclical industries.
Valuation and Relative Discount
Despite the negative trends, Suraj Ltd’s stock trades at a discount compared to its peers’ historical valuations. The enterprise value to capital employed ratio of 2.7 suggests that the market is pricing in subdued growth expectations. The low ROCE further supports the cautious stance on valuation. This discount may reflect the market’s assessment of the company’s recent financial performance and outlook.
Conclusion
Suraj Ltd’s fall to a 52-week low of Rs.225.05 marks a continuation of a challenging period for the company. The stock’s underperformance relative to the sector and broader market indices, combined with deteriorating financial metrics and valuation concerns, has contributed to the current market sentiment. While the broader market environment remains positive, Suraj Ltd’s position within the Iron & Steel Products sector highlights the differentiated performance among industry participants.
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