Universal Starch Chem Allied Ltd Gains 11.51%: 3 Key Factors Driving the Surge

Feb 9: Upgrade to Sell Rating Spurs Initial Gains

Universal Starch Chem Allied Ltd began the week on a positive note, closing at ₹132.85, up 3.30% from the previous close of ₹128.60. This followed MarketsMOJO’s upgrade of the stock’s rating from ‘Strong Sell’ to ‘Sell’ on 6 February 2026, reflecting improved technical indicators despite ongoing fundamental weaknesses. The upgrade was underpinned by a weekly MACD turning mildly bullish and a weekly RSI signalling short-term momentum improvement, although monthly technicals remained cautious.

Despite the upgrade, the company’s fundamentals remained subdued, with a five-year operating profit CAGR of just 3.92% and a weak EBIT to interest coverage ratio of 1.67. The stock’s valuation remained attractive, trading at an enterprise value to capital employed ratio of 0.9, suggesting undervaluation relative to peers. This technical optimism helped the stock outperform the Sensex, which rose 1.04% that day to 37,113.23.

Feb 10: Profit Taking Leads to Minor Pullback

The stock retraced some gains on 10 February, closing at ₹130.00, down 2.15% amid lower volume. This modest decline contrasted with the Sensex’s continued rise of 0.25% to 37,207.34. The pullback appeared to be profit-taking following the previous day’s upgrade-driven rally, with no new fundamental developments reported. The stock’s intraday range remained volatile, reflecting investor caution amid mixed signals from the company’s financial health.

Feb 11: Quarterly Results Spark Sharp Profitability Rebound

On 11 February, Universal Starch Chem Allied Ltd reported a significant turnaround in its Q3 FY26 financial results, which catalysed a strong 6.77% price gain to close at ₹138.80. The company posted a profit before tax excluding other income (PBT LESS OI) of ₹6.17 crores, a 214.0% increase compared to the average of the previous four quarters. Net profit after tax (PAT) rose 155.3% to ₹5.24 crores, signalling a robust recovery in earnings despite revenue headwinds.

This operational improvement was reflected in the stock’s volume surge to 457 lakh shares, indicating heightened investor interest. The operating profit to interest ratio reached an all-time high of 5.59 times, demonstrating enhanced debt servicing capacity. These results contrasted with the broader sector’s mixed returns and helped the stock outperform the Sensex, which gained a modest 0.13% that day.

Feb 12: Strong Quarterly Turnaround Amid Market Challenges

The positive momentum continued on 12 February as the stock closed at ₹140.25, up 1.04% on heavy volume of 3,300 lakh shares. The company’s financial trend score improved markedly from 2 to 19 over the last three months, signalling a shift from flat to positive momentum. This was supported by effective cost management and operational efficiencies that helped the company navigate a challenging market environment.

Despite the Sensex declining 0.56% to 37,049.40, Universal Starch’s share price advanced, reflecting investor confidence in the company’s turnaround story. However, the stock remained well below its 52-week high of ₹208.00, indicating that some caution persists among market participants.

Feb 13: Week Closes Strong Despite Sensex Weakness

Universal Starch Chem Allied Ltd ended the week on a positive note, closing at ₹143.40, up 2.25% on the day and marking an 11.51% gain for the week. This performance was in stark contrast to the Sensex, which fell 1.40% to 36,532.48. The stock’s resilience amid broader market weakness highlights the impact of the company’s recent operational improvements and technical upgrades.

Volume remained elevated at 753 lakh shares, reflecting sustained investor interest. The stock’s weekly high of ₹143.40 was also the closing price on Friday, underscoring strong buying momentum. Despite this, the stock trades significantly below its 52-week high of ₹208.00, suggesting room for further price discovery if positive trends continue.

Key Takeaways

Positive Signals: The upgrade from ‘Strong Sell’ to ‘Sell’ on 6 February 2026 was a pivotal event, reflecting improved technical momentum despite ongoing fundamental challenges. The sharp rebound in Q3 FY26 profitability, with PBT excluding other income rising 214.0% and PAT increasing 155.3%, demonstrated effective operational turnaround and cost management. The operating profit to interest ratio reaching 5.59 times indicates enhanced financial health and debt servicing capacity. The stock’s strong weekly gain of 11.51% amid a declining Sensex highlights its relative strength and investor interest.

Cautionary Signals: Despite recent improvements, the company’s fundamentals remain weak with a modest five-year CAGR in operating profits of 3.92% and a history of flat to negative financial trends. The stock’s valuation discount reflects underlying risks, and it remains well below its 52-week high of ₹208.00. Medium-term returns have been mixed, with underperformance relative to the Sensex over one year and one month horizons. The technical indicators, while improved on weekly charts, remain bearish on monthly timeframes, suggesting volatility and uncertainty persist.

Conclusion

Universal Starch Chem Allied Ltd’s week was characterised by a significant price rally driven by a combination of technical upgrades and a strong quarterly earnings turnaround. The stock’s 11.51% gain outpaced the Sensex’s 0.54% decline, underscoring its relative outperformance. While the upgrade to a ‘Sell’ rating and improved financial metrics signal a potential stabilisation, fundamental weaknesses and valuation risks remain. Investors should monitor upcoming results and sector developments closely to assess whether the positive momentum can be sustained in the face of ongoing market challenges.

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