Why is Supreme Petrochem Ltd falling/rising?

Recent Price Movement and Market Performance

Supreme Petrochem’s shares have been under pressure, declining by 4.91% over the past week compared to a modest 0.75% drop in the Sensex. The stock’s one-month performance is notably weak, down 15.09%, far exceeding the Sensex’s 1.98% decline. Year-to-date, the stock has lost 17.53%, while the broader market index has fallen only 2.32%. Over the last year, Supreme Petrochem’s shares have dropped 19.23%, contrasting sharply with the Sensex’s 8.65% gain. Despite this, the company has delivered a respectable 46.27% return over three years, outperforming the Sensex’s 36.79% in the same period, and an impressive 164.42% over five years, well above the benchmark’s 68.52%.

On 19-Jan, the stock traded close to its 52-week low, just 2.54% above the bottom price of ₹518.05. The share price has declined for three consecutive days, losing 5.7% in that span. Intraday, the stock touched a low of ₹523.6, down 2.99%. Technical indicators show the stock trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling bearish momentum. Investor participation has also waned, with delivery volumes on 16 Jan falling by 57.55% compared to the five-day average, suggesting reduced buying interest.

Fundamental Strengths and Valuation

Despite recent setbacks, 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 annual rate of 23.60%, and the company carries virtually no debt, with an average Debt to Equity ratio of zero. These factors underpin the firm’s financial health and growth potential.

The stock’s valuation appears reasonable, trading at a Price to Book Value of 4.5, which is attractive relative to its peers’ historical averages. The company’s ROE of 13.8 further supports this valuation. However, profitability has weakened over the past year, with profits declining by 25.3%, contributing to the stock’s negative returns.

Weak Quarterly Results Weigh on Sentiment

The primary catalyst for the recent share price decline is the company’s disappointing quarterly performance reported in September 2025. Net sales for the quarter stood at ₹1,100.15 crore, down 24.6% compared to the average of the previous four quarters. Profit before tax excluding other income fell sharply by 44.0% to ₹56.30 crore, while net profit after tax dropped 44.8% to ₹48.20 crore. These significant declines have raised concerns about the company’s near-term earnings trajectory.

Supreme Petrochem’s underperformance extends beyond the recent quarter. The stock has lagged the BSE500 index over the last three years, one year, and three months, signalling persistent challenges in delivering shareholder returns. This underperformance, combined with weak quarterly results, has dampened investor confidence and contributed to the ongoing share price weakness.

Conclusion: Why the Stock is Falling

In summary, Supreme Petrochem Ltd’s share price decline as of 19-Jan is primarily driven by disappointing quarterly results that revealed sharp declines in sales and profits. This has exacerbated an already negative trend, with the stock underperforming both the broader market and its sector peers over multiple time frames. Technical indicators and reduced investor participation further reinforce the bearish sentiment. While the company’s long-term fundamentals remain solid, the near-term earnings weakness and valuation pressures have weighed heavily on the stock, leading to its recent fall.

Investors should closely monitor upcoming quarterly results and market developments to assess whether the company can regain momentum or if the downtrend will persist.

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