Why is Sukhjit Starch & Chemicals Ltd falling/rising?

Recent Price Movement and Market Performance

The stock has been under pressure for the past three consecutive days, losing nearly 7.95% in that period. Intraday volatility was notably high at 6.37%, with the share price oscillating between a high of ₹190 and a low of ₹173.60. Despite touching an intraday peak, the weighted average price indicates that most trading volume occurred closer to the lower end of the day’s range, signalling selling pressure. Furthermore, delivery volumes on 07 Jan dropped by over 36% compared to the five-day average, suggesting waning investor participation.

When compared to the broader market, Sukhjit Starch has consistently underperformed. Over the past week, the stock declined by 4.81%, while the Sensex fell only 1.18%. Year-to-date, the stock is down 5.17%, again lagging the benchmark’s 1.22% fall. More strikingly, over the last year, the stock has plummeted 31.45%, in stark contrast to the Sensex’s 7.72% gain. This underperformance extends over three years, where the stock has lost 20.56% against the Sensex’s robust 40.53% rise.

Financial Health and Profitability Concerns

Despite trading at a discount relative to its peers, with an attractive Return on Capital Employed (ROCE) of 5.4 and an enterprise value to capital employed ratio of 1, the company’s fundamentals raise red flags. Over the past year, profits have plunged by 57.8%, signalling significant operational challenges. The latest half-year results reveal a 64.69% decline in profit after tax (PAT), amounting to just ₹9.31 crores. Operating profit has also contracted sharply by 24.91%, contributing to the company’s declaration of very negative results in September 2025.

Long-term growth prospects appear muted, with net sales growing at a modest annual rate of 14.86% and operating profit at 10.28% over the last five years. The company’s ability to service debt is particularly concerning, as reflected by a high Debt to EBITDA ratio of 2.52 times and a low operating profit to interest coverage ratio of just 2.06 times in the latest quarter. These metrics suggest financial strain and limited flexibility to manage liabilities effectively.

Investor Sentiment and Market Positioning

Investor confidence seems subdued, as evidenced by the absence of domestic mutual fund holdings in the company. Given the capacity of mutual funds to conduct thorough research and due diligence, their lack of exposure may indicate discomfort with the company’s valuation or business outlook. This sentiment is further underscored by the stock’s consistent underperformance against the BSE500 index over the past three years.

Technically, the stock’s price remains above its 20-day, 50-day, and 100-day moving averages but below its 5-day and 200-day averages, reflecting mixed momentum signals. The recent decline and high volatility suggest that short-term traders are cautious, while longer-term investors may be awaiting clearer signs of recovery.

Conclusion: Why the Stock is Falling

The decline in Sukhjit Starch & Chemicals Ltd’s share price on 08-Jan is primarily driven by deteriorating financial performance, including steep profit declines and weak debt servicing capacity. Despite a valuation that appears attractive on paper, the company’s negative quarterly results, shrinking profitability, and lack of institutional investor interest have weighed heavily on sentiment. The stock’s persistent underperformance relative to benchmarks over multiple time frames further compounds investor concerns. High intraday volatility and falling delivery volumes indicate cautious trading behaviour, reinforcing the downward pressure on the stock.

Investors should carefully weigh these factors against the company’s modest growth rates and financial risks before considering exposure. The current market environment suggests that Sukhjit Starch is facing significant headwinds that are unlikely to abate in the near term.

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