Recent Price Movement and Market Comparison
Supreme Petrochem has experienced a notable decline over recent periods, with the stock falling 6.81% in the past week and 16.75% over the last month. This contrasts sharply with the Sensex, which gained 0.87% and 2.03% over the same respective periods. Year-to-date, the stock is down 6.70%, while the Sensex has risen 9.60%. Over the last year, Supreme Petrochem’s shares have declined by 12.62%, whereas the Sensex has appreciated by 7.32%. Despite this recent weakness, the company’s longer-term performance remains strong, with a three-year return of 63.79% and a five-year return of 287.23%, significantly outperforming the Sensex’s 35.33% and 91.78% gains over the same durations.
On the day of 01-Dec, the stock underperformed its sector by 2.17%, hitting an intraday low of Rs 622.75, down 2.94%. The weighted average price indicates that more trading volume occurred near the day’s low, signalling selling pressure. Additionally, Supreme Petrochem is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, which typically suggests a bearish trend. Investor participation has also waned, with delivery volumes on 28 Nov dropping by 75.71% compared to the five-day average, indicating reduced buying interest.
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Fundamental Strengths and Valuation
Despite the recent price weakness, Supreme Petrochem maintains strong long-term fundamentals. The company boasts an average Return on Equity (ROE) of 30.47%, reflecting efficient capital utilisation. Operating profit has grown at an annualised rate of 23.60%, and the company carries virtually no debt, with an average debt-to-equity ratio of zero. These factors underscore the firm’s robust financial health and growth potential.
However, the stock currently trades at a premium valuation, with a Price to Book Value ratio of 5.3, which is higher than the average historical valuations of its peers. The ROE based on recent data stands at 13.8, suggesting a fair valuation in the current context. Investors should note that while the company’s fundamentals remain solid, the premium valuation may limit upside in the near term, especially amid weaker earnings.
Weak Quarterly Results Weigh on Sentiment
The primary catalyst for the recent decline in Supreme Petrochem’s share price is the disappointing quarterly performance reported in September 2025. Net sales for the quarter stood at Rs 1,100.15 crore, marking a sharp 24.6% decline compared to the average of the previous four quarters. Profit after tax (PAT) fell even more steeply, down 44.8% to Rs 48.20 crore. Earnings before interest, depreciation, taxes and amortisation (PBDIT) also hit a low of Rs 77.54 crore for the quarter.
These results have understandably dampened investor enthusiasm, as the company’s profitability has contracted significantly despite its long-term growth trajectory. The 25.3% fall in profits over the past year further compounds concerns about near-term earnings momentum.
Underperformance Relative to Market and Peers
Over the last year, Supreme Petrochem has underperformed not only the broader market but also its sector peers. While the BSE500 index generated returns of 5.03% during this period, Supreme Petrochem’s shares declined by 12.62%. This divergence highlights the challenges the company faces in regaining investor confidence amid a competitive and volatile petrochemical sector.
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Conclusion: Why the Stock is Falling
In summary, Supreme Petrochem’s recent share price decline is primarily driven by weak quarterly financial results that revealed significant drops in sales and profits. This has led to a loss of investor confidence, reflected in falling volumes and the stock trading below all major moving averages. The company’s underperformance relative to the broader market and its sector peers over the past year further exacerbates negative sentiment.
While the company’s long-term fundamentals remain strong, including a high ROE and zero debt, the premium valuation and recent earnings contraction have weighed heavily on the stock. Investors appear cautious, awaiting signs of a turnaround in profitability before committing further capital. Until then, the downward pressure on Supreme Petrochem’s shares is likely to persist.
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