Recent Price Movement and Market Context
The stock’s recent performance has been lacklustre, with a one-week decline of 3.62% contrasting sharply with the Sensex’s marginal gain of 0.01%. Over the past month, the stock has plummeted by 25.89%, while the Sensex rose by 2.70%. Year-to-date, S H Kelkar & Co. has lost 33.01% in value, whereas the benchmark index has gained 9.69%. The one-year return is even more stark, with the stock down 40.87% compared to the Sensex’s 4.83% rise. This trend highlights the company’s persistent underperformance against broader market indices.
On the day in question, the stock underperformed its sector by 2.43%, touching an intraday low of ₹163.7, a 2.76% drop from previous levels. Technical indicators also signal weakness, as the share price is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – suggesting a bearish momentum. Additionally, investor participation appears to be waning, with delivery volumes on 04 Dec falling by 44.44% compared to the five-day average, indicating reduced buying interest.
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Financial Performance and Valuation Insights
Despite the negative price action, S H Kelkar & Co. maintains some positive financial attributes. The company’s average debt-to-equity ratio stands at a modest 0.50 times, reflecting a relatively conservative capital structure. Its return on capital employed (ROCE) is 7.6%, which, while not robust, supports an attractive valuation metric with an enterprise value to capital employed ratio of 1.4. This suggests the stock is trading at a discount relative to its peers’ historical valuations.
However, these positives are overshadowed by deteriorating profitability. Over the past year, the company’s profits have declined by 33.9%, aligning with the steep 40.87% drop in share price during the same period. This erosion in earnings power has weighed heavily on investor sentiment.
Institutional investors have increased their stake by 2.72% in the previous quarter, now collectively holding 13.05% of the company. This growing institutional interest may reflect a belief in the company’s long-term fundamentals, but it has not yet translated into positive price momentum.
Weak Operational Metrics and Earnings Setbacks
The company’s operating profit growth has been sluggish, expanding at an annual rate of just 5.43% over the last five years, which is below expectations for sustained growth. More concerning are the recent quarterly results for September 2025, which revealed a sharp 72.3% decline in profit after tax (PAT) to ₹8.62 crores compared to the previous four-quarter average. The half-year ROCE also hit a low of 7.42%, while the operating profit to interest coverage ratio dropped to 3.79 times, signalling increased financial strain.
These weak earnings and profitability metrics have contributed to the stock’s poor long-term performance. Over three years, the stock has returned only 15.42%, significantly lagging the Sensex’s 36.41% gain. It has also underperformed the BSE500 index over the last three years, one year, and three months, underscoring its relative weakness in the market.
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Conclusion: Why the Stock is Falling
The decline in S H Kelkar & Co.’s share price on 05-Dec and over the recent months is primarily driven by disappointing financial results, including a significant drop in quarterly profits and weak operational metrics. The company’s inability to generate strong earnings growth, coupled with its underperformance relative to major indices and peers, has dampened investor confidence. Technical indicators and falling investor participation further exacerbate the negative sentiment surrounding the stock.
While the company’s valuation appears attractive and institutional investors have increased their holdings, these factors have not been sufficient to offset concerns about profitability and growth prospects. As a result, the stock continues to trade under pressure, reflecting the market’s cautious stance on its near-term outlook.
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