Why is Jindal Poly Films Ltd falling/rising?

Recent Price Movement and Market Context

After enduring a steep decline over the past year, with the stock losing more than half its value (-51.41%) compared to the Sensex’s positive 7.73% return, Jindal Poly Films Ltd’s recent price action marks a significant intraday rebound. The stock hit a new 52-week low of ₹359.9 earlier on the same day, before rallying to an intraday high of ₹429.9, representing a 17.44% surge from the low point. This sharp recovery follows a prolonged period of ten consecutive days of price declines, signalling a potential short-term trend reversal.

Despite this bounce, the stock remains below its longer-term moving averages (20-day, 50-day, 100-day, and 200-day), indicating that the broader downtrend is still intact. The trading range for the day was wide, spanning ₹70, reflecting heightened volatility and investor indecision. Notably, the weighted average price suggests that a larger volume of shares traded closer to the day’s lower price levels, hinting at cautious buying interest rather than a robust rally.

Fundamental Challenges Weighing on the Stock

Jindal Poly Films Ltd’s recent price rise contrasts sharply with its underlying financial performance, which remains under significant pressure. The company has reported very negative results for the last two consecutive quarters, with net sales declining by 55.08% as of September 2025. The nine-month figures reveal a 20.34% drop in net sales to ₹2,743.68 crores and a net loss after tax of ₹44.57 crores, reflecting a 20.34% deterioration. Operating profits have contracted at an alarming annualised rate of -150.30% over the past five years, underscoring persistent operational challenges.

Interest expenses have surged by over 50% to ₹238.10 crores in the nine-month period, further straining profitability. The company’s negative operating profits and falling investor participation, evidenced by a 35.93% decline in delivery volume compared to the five-day average, highlight ongoing investor scepticism. Domestic mutual funds hold no stake in the company, which may indicate a lack of confidence from institutional investors who typically conduct thorough due diligence.

Sector and Liquidity Considerations

The stock’s recent outperformance relative to its sector, which gained 2.76% on the day, is notable. Jindal Poly Films Ltd outpaced the Plastic Products sector by 7.3%, suggesting some selective buying interest possibly driven by technical factors or short-term speculative trades. Liquidity remains adequate for modest trade sizes, with the stock’s traded value representing about 2% of its five-day average, allowing for reasonable market participation despite the recent decline in delivery volumes.

Its debt servicing ability remains a relative positive, with a low Debt to EBITDA ratio of 0.77 times, indicating manageable leverage levels. However, this strength is overshadowed by the company’s poor growth trajectory and negative profitability trends, which continue to weigh heavily on investor sentiment.

Conclusion: A Short-Term Bounce Amidst Long-Term Weakness

In summary, the 10.03% rise in Jindal Poly Films Ltd’s share price on 22-Jan represents a short-term technical rebound following a prolonged decline and a new 52-week low. While the stock’s intraday volatility and outperformance relative to its sector may attract some speculative interest, the company’s fundamental challenges remain significant. Weak sales, negative profitability, rising interest costs, and lack of institutional backing continue to cast a shadow over its medium- to long-term prospects.

Investors should approach the recent price rise with caution, recognising it as a potential relief rally rather than a definitive turnaround. The stock’s underperformance against major benchmarks over one, three, and five-year periods further emphasises the need for careful analysis before considering exposure to this name.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →