Recent Price Movements and Market Context
National Peroxide Ltd’s shares have been under pressure, hitting a new 52-week and all-time low of ₹400 during intraday trading on 27-Jan. Despite touching an intraday high of ₹430, the stock closed significantly lower, reflecting selling pressure. The weighted average price indicates that most trading volume occurred near the day’s low, signalling bearish sentiment among investors. The stock has declined for two consecutive days, losing 6.44% in that period, and underperformed its sector by 1.52% on the day.
Further compounding concerns, the stock is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – which typically suggests a sustained downtrend. Investor participation has also waned, with delivery volumes on 22-Jan falling by nearly 75% compared to the five-day average, indicating reduced conviction among shareholders.
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Long-Term Underperformance and Weak Financials
Over the past year, National Peroxide Ltd’s stock has plummeted by 41.14%, starkly contrasting with the Sensex’s 8.61% gain over the same period. The stock’s one-month and year-to-date returns are also deeply negative at -14.74% and -13.46% respectively, while the Sensex has posted modest positive returns. This persistent underperformance extends to longer horizons, with the stock lagging the broader BSE500 index over one and three years.
The company’s fundamental metrics reveal significant weaknesses. Operating profits have contracted at a compounded annual growth rate (CAGR) of -135.58% over the last five years, signalling severe operational challenges. Profitability remains subdued, with an average return on equity of just 1.90%, indicating limited value creation for shareholders. Additionally, the company’s ability to service debt is strained, reflected in a poor average EBIT to interest coverage ratio of 0.14, raising concerns about financial stability.
Recent financial results have been disappointing. The latest six-month profit after tax (PAT) stood at ₹1.28 crore, declining by 77.78%, while non-operating income accounted for an outsized 263.49% of profit before tax, suggesting reliance on irregular income streams rather than core business strength.
These factors contribute to the stock’s classification as risky, trading at valuations that are unfavourable compared to historical averages. The stark decline in profits by 113% over the past year further exacerbates investor concerns, undermining confidence in the company’s growth prospects.
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Investor Sentiment and Outlook
Investor sentiment towards National Peroxide Ltd remains subdued, as evidenced by falling delivery volumes and the stock’s inability to sustain gains above key moving averages. The combination of weak operational performance, poor profitability, and financial risk has led to sustained selling pressure. The stock’s liquidity remains adequate for trading, but the lack of positive catalysts and continued underperformance relative to benchmarks suggest caution for investors.
In summary, the decline in National Peroxide Ltd’s share price on 27-Jan is primarily driven by its deteriorating financial health, weak earnings growth, and persistent underperformance against market indices. These factors have eroded investor confidence, resulting in the stock hitting new lows and continuing its downward trajectory.
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