TVS Supply Chain Solutions Hits All-Time Low Amid Prolonged Downtrend

Recent Price Movements and Market Context

The stock price of TVS Supply Chain Solutions has been on a downward trajectory, falling by 1.72% on the latest trading day, underperforming the broader Sensex index which declined by 0.74%. Over the past six consecutive trading sessions, the stock has recorded a cumulative return of -7.98%, indicating persistent selling pressure. This trend has culminated in the stock trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained bearish momentum.

When compared to its sector peers, TVS Supply Chain Solutions underperformed by 0.52% on the day, highlighting relative weakness within the transport services industry. The stock’s one-week performance shows a decline of 7.60%, while the Sensex recorded a marginal fall of 0.78% in the same period. Over the last month, the stock’s return stands at -21.09%, contrasting with a 1.51% gain in the Sensex, further emphasising the stock’s lagging position.

Longer-Term Performance Analysis

Examining the stock’s performance over extended periods reveals a more pronounced divergence from market benchmarks. Over three months, TVS Supply Chain Solutions has recorded a return of -23.59%, while the Sensex appreciated by 4.15%. The one-year return for the stock is -45.88%, in stark contrast to the Sensex’s 3.63% gain. Year-to-date figures also reflect a similar pattern, with the stock down 43.79% against an 8.10% rise in the Sensex.

Notably, the stock has not registered any gains over the past three, five, and ten years, remaining flat at 0.00%, whereas the Sensex has delivered returns of 35.84%, 83.22%, and 237.39% respectively over these periods. This long-term underperformance highlights the challenges faced by TVS Supply Chain Solutions in generating shareholder value relative to the broader market.

Financial Metrics and Profitability Indicators

TVS Supply Chain Solutions’ financial data over recent years points to subdued growth and profitability. The company’s operating profits have shown a compound annual growth rate (CAGR) of -1.29% over the last five years, indicating a contraction in core earnings. The average EBIT to interest ratio stands at 0.84, reflecting limited capacity to cover interest expenses from operating earnings, which may raise concerns regarding debt servicing ability.

Return on equity (ROE) averaged 3.86%, suggesting modest profitability relative to shareholders’ funds. This level of ROE is comparatively low within the transport services sector, where higher returns are typically expected to compensate for business risks.

Additionally, promoter shareholding includes 29.23% of pledged shares. In volatile or declining markets, a high proportion of pledged shares can exert additional downward pressure on stock prices, as forced selling may occur if margin calls arise.

Debt and Capital Structure

The company’s debt-equity ratio at the half-year mark was recorded at 1.14 times, representing the lowest level in recent periods. This indicates a moderate leverage position, though the ability to service debt remains constrained as reflected in the EBIT to interest coverage ratio.

Return on capital employed (ROCE) for the half-year was noted at 8.72%, the highest in recent times, while the annualised ROCE stands at 4.3%. The enterprise value to capital employed ratio is 1.8, which suggests the stock is trading at a valuation discount relative to its capital base and peers’ historical averages.

Profitability and Cash Flow Highlights

Despite the stock’s price decline, the company reported its highest operating cash flow for the year at ₹524.20 crores in the latest period. Furthermore, profits have risen by 302% over the past year, a notable increase that contrasts with the stock’s negative return of -45.88% during the same timeframe. This divergence between profit growth and share price performance may reflect market concerns beyond immediate earnings figures.

Sector and Market Position

Operating within the transport services sector, TVS Supply Chain Solutions faces a competitive landscape where efficiency and scale are critical. The stock’s recent underperformance relative to the BSE500 index over one, three, and five-year periods underscores the challenges in maintaining market share and profitability. While the broader market indices have delivered positive returns, the company’s stock has remained flat or negative over these timeframes.

The stock’s current valuation metrics, including a low PEG ratio of 0.1, indicate that the market is pricing in subdued growth expectations despite recent profit increases. This valuation context reflects a cautious market stance towards the company’s prospects.

Summary of Current Situation

TVS Supply Chain Solutions’ stock reaching an all-time low of ₹100.9 is a significant event that highlights the cumulative impact of prolonged price declines, subdued financial growth, and market valuation pressures. The stock’s performance across multiple time horizons has lagged behind key benchmarks, and key financial ratios point to modest profitability and constrained debt servicing capacity. The presence of a substantial proportion of pledged promoter shares adds an additional layer of complexity to the stock’s price dynamics.

While the company has reported some positive financial indicators such as improved operating cash flow and profit growth, these have not translated into share price gains. The stock remains below all major moving averages, reflecting ongoing market caution.

Limited Time Only! Upgrade now and get 1 Year of Stock of the week worth Rs. 14,999 for FREE. Don't miss out on this exclusive offer. Claim Your Free Year →