Recent Price Movement and Market Context
The stock’s gain on 07-Jan contrasts with its broader trend over the past year and longer periods. While it has risen 2.28% over the past week and year-to-date, it remains down 13.69% over the last month and has suffered a steep 28.16% decline over the past year. This contrasts sharply with the Sensex, which has gained 8.65% over the same one-year period. Over three years, Natraj Proteins has underperformed significantly, falling 45.18% while the Sensex rose 41.84%. Even over five years, the stock’s 70.91% gain trails the benchmark’s 76.66% advance.
On the day of the price rise, the stock outperformed its sector by 2.79%, indicating relative strength within its industry. The share price is currently above its 5-day moving average but remains below longer-term averages including the 20-day, 50-day, 100-day, and 200-day moving averages. This suggests some short-term momentum but persistent longer-term resistance levels.
Investor participation, however, appears to be waning, with delivery volume on 06-Jan plunging by 85.04% compared to the five-day average. Despite this, liquidity remains sufficient for trading, supporting the recent price movement.
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Valuation and Profitability Factors
One of the key reasons behind the recent price rise appears to be the stock’s attractive valuation metrics. The company boasts a return on capital employed (ROCE) of 1%, coupled with an enterprise value to capital employed ratio of 0.7, indicating it is trading at a discount relative to its peers’ historical valuations. This valuation appeal may be enticing investors despite the company’s operational challenges.
Moreover, while the stock has delivered negative returns over the past year, Natraj Proteins has reported a 55.3% increase in profits during the same period. This profit growth contrasts with the stock’s price performance and could be a factor encouraging buying interest, as investors may anticipate a turnaround or improved future earnings.
It is notable that the majority shareholders are non-institutional, which can sometimes lead to more volatile trading patterns and price movements driven by retail investor sentiment.
Fundamental Weaknesses and Operational Challenges
Despite the recent uptick, the company’s fundamentals remain weak. It continues to report operating losses and exhibits low long-term profitability, with an average return on equity (ROE) of just 6.97%. This low ROE indicates limited efficiency in generating profits from shareholders’ funds.
Recent quarterly results have been disappointing, with net sales for the nine months ending September 2025 declining by 23.59% to ₹76.54 crores. The company’s PBDIT for the quarter was a loss of ₹1.02 crores, and operating profit as a percentage of net sales fell to a low of -3.79%. These figures highlight ongoing operational difficulties that weigh on investor confidence.
Furthermore, the stock has consistently underperformed the BSE500 index over the last three years, reinforcing concerns about its long-term growth prospects and market competitiveness.
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Conclusion: A Short-Term Rise Amid Structural Challenges
The rise in Natraj Proteins Ltd’s share price on 07-Jan appears to be driven primarily by its attractive valuation and recent profit growth, which may be encouraging some investors to buy despite the company’s weak operating performance and long-term underperformance relative to benchmarks. The stock’s outperformance against its sector and short-term moving average support also contribute to the positive price action.
However, the company’s ongoing operating losses, declining sales, and low return on equity highlight significant fundamental challenges that temper enthusiasm. The sharp fall in delivery volumes suggests that investor participation is limited, which could lead to volatility in the stock price.
Investors should weigh the valuation appeal against the operational risks and consider the stock’s historical underperformance before making investment decisions. The current price rise may represent a short-term technical rebound rather than a sustained recovery in fundamentals.
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