Universal Starch Chem Allied Falls to 52-Week Low of Rs.125

Recent Price Movement and Market Context

The stock opened today at Rs.125 and remained at this level throughout the trading session, reflecting a day of subdued activity. Over the last four trading days, Universal Starch Chem Allied has recorded a cumulative return of approximately -9.94%, signalling a sustained downward trend. This contrasts with the broader market, where the Sensex opened 88.12 points higher and is currently trading at 85,389.42, representing a 0.18% gain. The Sensex is also just 0.48% shy of its 52-week high of 85,801.70 and has been on a three-week consecutive rise, gaining 2.61% in that period.

Universal Starch Chem Allied’s performance diverges notably from the market’s positive momentum, with the stock trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning indicates a persistent weakness relative to its historical price levels and sector peers.

Long-Term and Short-Term Performance Analysis

Examining the stock’s performance over the past year reveals a decline of 28.47%, a stark contrast to the Sensex’s 7.93% gain over the same period. The stock’s 52-week high was Rs.208, highlighting the extent of the recent price contraction. This underperformance extends beyond the last year, with returns lagging behind the BSE500 index over the last three years, one year, and three months.

Universal Starch Chem Allied operates within the Other Agricultural Products industry and sector, where mid-cap stocks have generally shown resilience, as evidenced by the BSE Mid Cap index’s 0.2% gain today. Despite this, the company’s stock has not mirrored this sector strength.

Financial Metrics and Profitability Trends

The company’s quarterly net sales stood at Rs.97.14 crore, reflecting a decline of 18.9% compared to the previous four-quarter average. This contraction in sales contributes to the subdued financial performance observed in recent periods.

Over the last five years, the compound annual growth rate (CAGR) of operating profits has been 3.92%, indicating modest growth in earnings before interest and taxes. However, the company’s ability to service its debt remains constrained, with an average EBIT to interest ratio of 1.67, suggesting limited coverage of interest expenses by operating earnings.

Return on capital employed (ROCE) is reported at 9.4%, which, alongside an enterprise value to capital employed ratio of 0.9, points to a valuation that is attractive relative to the company’s capital base. Despite this, the stock’s price performance has not reflected these valuation metrics, as it trades at a discount compared to its peers’ historical averages.

Profit Growth Versus Share Price Movement

Interestingly, while the stock price has declined by 28.47% over the past year, the company’s profits have shown a substantial rise of 351.8% during the same period. This divergence between profit growth and share price performance may indicate market concerns beyond immediate earnings, possibly related to broader financial health or sector-specific factors.

Shareholding and Market Capitalisation

The majority shareholding remains with the promoters, maintaining a stable ownership structure. The company’s market capitalisation grade is rated at 4, reflecting its standing within the market capitalisation spectrum.

Sector and Market Comparison

Within the Other Agricultural Products sector, Universal Starch Chem Allied’s recent price action contrasts with the broader market’s upward trajectory. The Sensex’s position above its 50-day and 200-day moving averages, with the 50 DMA above the 200 DMA, signals a bullish market environment. Mid-cap stocks, in particular, have been leading gains, which further highlights the stock’s relative underperformance.

The stock’s day change today was recorded at -0.87%, aligning with the sector’s overall performance but continuing a multi-day decline. This persistent downward movement has culminated in the new 52-week low, underscoring the challenges faced by the company’s shares in regaining upward momentum.

Summary of Key Price and Performance Indicators

To summarise, Universal Starch Chem Allied’s stock has:

• Reached a 52-week low of Rs.125


• Recorded a four-day cumulative return of approximately -9.94%


• Underperformed the Sensex, which has gained 7.93% over the past year


• Remained below all major moving averages, indicating technical weakness


• Experienced a decline in quarterly net sales by 18.9%


• Shown modest operating profit growth over five years at 3.92% CAGR


• Maintained a ROCE of 9.4% and an enterprise value to capital employed ratio of 0.9

These factors collectively provide a comprehensive view of the stock’s current position within the market and its recent financial performance.

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