Why is Rajshree Polypac falling/rising?

Persistent Underperformance Against Benchmarks

Rajshree Polypac’s recent price movement is symptomatic of its sustained weak performance over multiple time horizons. Over the past week, the stock has declined by 10.72%, significantly underperforming the Sensex’s modest fall of 0.82%. The trend extends over longer periods, with the stock down 10.20% in the last month while the Sensex gained 1.84%. Year-to-date, the stock has plummeted 54.41%, in stark contrast to the Sensex’s 9.79% rise. Over one year, the stock’s return stands at a negative 57.06%, whereas the Sensex has appreciated by 5.20%. Even over three and five years, Rajshree Polypac has lagged dramatically, with losses of 69.92% and 46.92% respectively, while the Sensex surged 39.50% and 93.84% in the same periods.

Technical Weakness and Investor Sentiment

On the technical front, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish trend. The decline to a fresh 52-week low further underscores the negative momentum. Investor participation has also waned, with delivery volumes on 05 Dec dropping by nearly 49% compared to the five-day average, indicating reduced buying interest and liquidity concerns. Although the stock remains sufficiently liquid for trading, the lack of robust investor engagement exacerbates downward pressure on the price.

Fundamental Challenges Despite Some Positive Earnings Growth

While Rajshree Polypac reported encouraging profit growth in the latest six months, with PAT rising 71.20% to ₹8.68 crores and a quarterly PBT excluding other income reaching ₹4.07 crores, these gains have not translated into positive investor sentiment. The company’s half-yearly Return on Capital Employed (ROCE) peaked at 9.06%, and the enterprise value to capital employed ratio stands at an attractive 0.8, suggesting the stock is trading at a discount relative to peers’ historical valuations. Additionally, the company’s profits have increased by 18% over the past year, and the PEG ratio of 0.7 indicates potential undervaluation on a growth-adjusted basis.

However, these positives are overshadowed by significant long-term weaknesses. The company’s average ROCE over time is a modest 8.19%, reflecting limited efficiency in generating returns from capital. Net sales have grown at a sluggish annual rate of 12.47%, while operating profit growth has been even more subdued at 3.96% over the last five years. Furthermore, the company’s debt servicing capacity is a concern, with a high Debt to EBITDA ratio of 2.59 times, indicating elevated leverage and potential financial risk.

Rajshree Polypac’s poor long-term growth trajectory and weak fundamental strength have contributed to its sustained underperformance relative to broader market indices such as the BSE500. The stock’s negative returns over one year and three years, combined with its inability to keep pace with sector and market benchmarks, have eroded investor confidence.

Conclusion: Why Rajshree Polypac Is Falling

The sharp decline in Rajshree Polypac’s share price on 08-Dec is primarily driven by its weak long-term fundamentals, persistent underperformance against market benchmarks, and deteriorating technical indicators. Despite some recent profit growth and attractive valuation metrics, the company’s limited sales and operating profit expansion, coupled with high leverage, have undermined investor confidence. The stock’s fall below all major moving averages and the fresh 52-week low reflect negative market sentiment and reduced investor participation. Until the company demonstrates sustained improvement in its growth trajectory and financial health, the downward pressure on its share price is likely to persist.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →