Why is SKP Bearing falling/rising?

Persistent Underperformance Against Benchmarks

SKP Bearing’s stock has consistently lagged behind key market indices over multiple time horizons. Over the past week, the stock declined by 12.27%, while the Sensex gained 0.57%. This negative trend extends over longer periods, with the stock down 22.06% in the last month compared to a 1.21% rise in the Sensex. Year-to-date, SKP Bearing has fallen 27.59%, starkly contrasting with the Sensex’s 10.10% gain. Even over one and three years, the stock has posted losses of 20.61% and 21.72% respectively, while the Sensex surged 7.23% and 39.24% in the same periods. This consistent underperformance highlights the stock’s inability to keep pace with broader market gains, undermining investor confidence.

Weak Financial Metrics and Valuation Concerns

Fundamental financial indicators paint a challenging picture for SKP Bearing. The company’s operating profit has contracted at an alarming annual rate of 46.78% over the last five years, signalling deteriorating operational efficiency. Furthermore, profits have plunged by 72% over the past year, underscoring significant earnings pressure. Despite this, the stock trades at a relatively high valuation, with an enterprise value to capital employed ratio of 3.9 and a return on capital employed (ROCE) of just 10. Such metrics suggest the stock is expensive relative to its capital returns, raising questions about its growth prospects and value proposition for investors.

Technical Weakness and Investor Sentiment

From a technical standpoint, SKP Bearing’s shares are trading below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This broad-based weakness signals a bearish trend and may deter short-term traders and momentum investors. Additionally, investor participation has diminished, with delivery volumes on 01 Dec falling by 41.18% compared to the five-day average. Reduced trading volumes often reflect waning interest and can exacerbate price declines due to lower liquidity and market depth.

Sector and Market Context

SKP Bearing’s underperformance is further highlighted by its lag relative to sector peers, having underperformed the sector by 5.3% on the day of the price drop. While the broader market and sector indices have shown resilience, SKP Bearing’s inability to keep pace suggests company-specific challenges rather than broader industry headwinds. The majority shareholding by promoters has not translated into positive momentum, indicating that internal factors may be weighing on the stock’s performance.

Outlook and Investor Considerations

Given the combination of poor long-term growth, sharply declining profits, expensive valuation metrics, and persistent underperformance against benchmarks, SKP Bearing’s current share price decline appears justified by fundamentals. The flat financial results reported in June 2025 further reinforce concerns about the company’s growth trajectory. Investors should approach the stock with caution, considering the lack of positive catalysts and the prevailing negative momentum. For those seeking exposure in the bearing or related sectors, evaluating alternative stocks with stronger financials and better market performance may be prudent.

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 →