Why is Shankar Lal Ram. falling/rising?

Recent Price Movement and Market Performance

The stock has experienced a notable downward trajectory, falling by 7.87% over the past week compared to a marginal 0.52% decline in the Sensex. Over the last month, the stock’s losses have deepened to 15.59%, while the Sensex has gained 0.95%. Year-to-date, the stock has plummeted by 28.06%, starkly contrasting with the Sensex’s 9.12% rise. This underperformance extends over longer periods as well, with a one-year return of -28.22% against the Sensex’s 4.89% gain and a three-year decline of 54.20% compared to the benchmark’s 37.24% growth. Despite this, the stock’s five-year return remains impressive at 905.33%, though this appears to be an outlier relative to recent trends.

On 12-Dec, the stock underperformed its sector by 2.91%, continuing a three-day losing streak that has resulted in an 8.36% drop. Intraday, it touched a low of ₹58, down nearly 8%, with heavier trading volume concentrated near this low price point. The stock is currently trading below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum. Investor participation has also waned, with delivery volumes on 11 Dec falling by over 40% compared to the five-day average, indicating reduced confidence among shareholders.

Financial Health and Valuation Metrics

Despite the recent price decline, Shankar Lal Rampal Dye-Chem Ltd exhibits some positive financial attributes. The company boasts a high return on capital employed (ROCE) of 31.07%, reflecting efficient management and capital utilisation. Its debt-to-equity ratio remains low at 0.07 times, indicating a conservative capital structure with limited leverage. The enterprise value to capital employed ratio stands at 3.1, suggesting a fair valuation relative to its capital base. Furthermore, the stock trades at a discount compared to its peers’ historical valuations, which could be attractive to value investors.

Profitability has shown some resilience, with profits rising by 18.2% over the past year despite the stock’s negative returns. The company’s price-to-earnings-to-growth (PEG) ratio of 1.8 indicates moderate valuation relative to its earnings growth prospects. Promoters remain the majority shareholders, which often signals stable ownership and strategic continuity.

Challenges Weighing on the Stock

However, the company’s long-term growth outlook remains subdued. Operating profit has contracted at an annualised rate of 2.92% over the past five years, signalling structural challenges in expanding core earnings. The most recent quarterly results for September 2025 were disappointing, with profit after tax (PAT) falling 22% to ₹2.37 crores compared to the previous four-quarter average. Earnings per share (EPS) also hit a low of ₹0.37, while cash and cash equivalents dropped to ₹0.86 crores, the lowest in recent periods, raising concerns about liquidity.

Consistent underperformance relative to benchmarks has further dampened investor sentiment. The stock has underperformed the BSE500 index in each of the last three annual periods, compounding the negative momentum. This persistent lag, combined with weak recent earnings and declining investor participation, has contributed to the stock’s ongoing price decline.

Conclusion: Why the Stock is Falling

In summary, Shankar Lal Rampal Dye-Chem Ltd’s share price decline as of 12-Dec is primarily driven by a combination of weak recent financial results, poor long-term growth trends, and sustained underperformance against market benchmarks. Despite strong management efficiency and a conservative balance sheet, the company’s flat quarterly earnings, shrinking cash reserves, and negative operating profit growth over five years have undermined investor confidence. The stock’s failure to keep pace with broader market gains and its trading below key moving averages further reinforce the bearish outlook. Reduced investor participation and heavier volume near intraday lows suggest that market participants remain cautious, contributing to the ongoing downward pressure on the stock price.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →