Recent Price Movement and Market Context
The stock’s decline on 06-Jan followed two consecutive days of gains, signalling a trend reversal. Intraday volatility was notably high at 6.1%, with the share price touching a low of ₹592.6, representing an 8.2% drop from recent levels. Trading volumes were concentrated near these lower price points, indicating selling pressure. Furthermore, Supreme Petrochem is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, underscoring a bearish technical outlook.
In comparison to the Sensex, which gained 0.46% over the past week, Supreme Petrochem’s shares fell by 4.75% in the same period. Year-to-date, the stock has declined by 5.35%, while the Sensex has remained relatively flat with a marginal 0.18% loss. Over the last year, the stock has underperformed significantly, delivering a negative return of 6.44% against the Sensex’s robust 9.10% gain. This persistent underperformance has weighed heavily on investor sentiment.
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Fundamental Performance 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 a healthy annual rate of 23.60%, and the firm carries virtually no debt, with an average Debt to Equity ratio of zero. These factors typically underpin investor confidence in the company’s financial health.
However, the stock is currently trading at a premium valuation, with a Price to Book Value of 5.2 and a more modest ROE of 13.8 when considering recent periods. This premium positioning may limit upside potential, especially given the recent deterioration in profitability. Over the past year, Supreme Petrochem’s profits have declined by 25.3%, a significant contraction that has likely contributed to the share price weakness.
Impact of Recent Quarterly Results
The most immediate catalyst for the share price decline appears to be the company’s disappointing quarterly results reported in September 2025. The Profit After Tax (PAT) for the quarter stood at ₹48.20 crore, marking a steep fall of 44.8% compared to the average of the previous four quarters. Net sales for the quarter were the lowest in recent periods at ₹1,100.15 crore, while Profit Before Depreciation, Interest, and Taxes (PBDIT) also hit a low of ₹77.54 crore. These weak earnings metrics have raised concerns about the company’s near-term earnings trajectory.
Such a sharp decline in quarterly profitability contrasts with the broader market’s performance, where the BSE500 index has generated a positive return of 7.74% over the last year. Supreme Petrochem’s negative returns of 6.44% over the same period highlight its relative underperformance and may have prompted investors to reduce exposure.
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Investor Participation and Liquidity
Interestingly, investor participation has increased recently, with delivery volumes on 05 Jan rising by 74.18% compared to the five-day average. This heightened activity suggests that while some investors are exiting, others may be repositioning or accumulating at lower levels. The stock remains sufficiently liquid to accommodate trades of modest size, supporting ongoing market interest despite the recent downturn.
Conclusion
In summary, Supreme Petrochem Ltd’s share price decline on 06-Jan is primarily driven by weak quarterly earnings results and sustained underperformance relative to market benchmarks. Although the company’s long-term fundamentals remain robust, the recent contraction in profits and premium valuation have weighed on investor sentiment. The stock’s technical indicators and high intraday volatility further reinforce the cautious outlook. Investors should closely monitor upcoming earnings and market developments to assess whether the current weakness presents a buying opportunity or signals deeper challenges ahead.
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