Why is Kothari Sugars falling/rising?

Recent Price Movement and Market Comparison

Kothari Sugars’ stock has been under pressure recently, falling by 1.97% over the past week and 8.00% in the last month. This contrasts sharply with the broader Sensex, which gained 0.61% and 0.77% over the same periods respectively. Year-to-date, the stock has plummeted by 34.21%, while the Sensex has risen by 10.25%. Over the last year, the stock’s decline of 38.55% starkly contrasts with the Sensex’s 11.64% gain, highlighting the company’s relative weakness in the market.

Kothari Sugars is currently trading close to its 52-week low, just 3.92% above the lowest price of ₹27.72. The stock’s performance today also lagged behind its sector by 1.86%, and it is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. These technical indicators suggest sustained bearish sentiment among investors.

Investor participation has also diminished, with delivery volume on 20 Nov falling by nearly 50% compared to the five-day average, signalling reduced trading interest and liquidity concerns despite the stock’s adequate tradability.

Financial Performance and Profitability Concerns

The primary driver behind Kothari Sugars’ share price decline is its weak financial performance. Over the past five years, the company’s net sales have contracted at an annual rate of 7.15%, while operating profit has deteriorated dramatically by 224.90%. This negative trend culminated in very disappointing quarterly results declared in September 2025, with net sales falling by 5.2% compared to the previous four-quarter average.

The company has reported losses for seven consecutive quarters, with the latest six-month period showing a net loss (PAT) of ₹7.17 crores, worsening by 29.54%. Return on capital employed (ROCE) for the half-year stands at a negative 1.66%, underscoring the company’s inability to generate adequate returns on its investments.

Adding to concerns, Kothari Sugars is currently operating with negative EBITDA, which increases the risk profile of the stock. Over the past year, profits have plunged by 152%, while the stock’s price has declined by 38.55%, indicating that the market is pricing in these deteriorating fundamentals.

Despite these challenges, the company maintains a low debt-to-equity ratio, effectively zero, which limits financial leverage risk. The majority ownership remains with promoters, which may provide some stability, but this has not translated into improved operational performance.

Long-Term Underperformance and Market Sentiment

Over a three-year horizon, Kothari Sugars has underperformed significantly, with a negative return of 31.15% compared to the Sensex’s robust 43.55% gain. Even over five years, while the stock has delivered a cumulative return of 103.17%, this is only marginally ahead of the Sensex’s 102.72%, reflecting a lack of meaningful outperformance.

The persistent negative earnings, declining sales, and poor return metrics have contributed to a negative market sentiment, reflected in the stock’s consistent underperformance relative to broader indices and sector peers. The lack of investor confidence is further evidenced by the falling delivery volumes and the stock’s position below all major moving averages.

Given these factors, the stock is widely regarded as a strong sell by market analysts, with risks outweighing potential rewards in the near to medium term.

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