Why is Surya Roshni falling/rising?

Recent Price Movement and Market Context

Surya Roshni’s shares have been under pressure for the past nine consecutive trading sessions, resulting in a cumulative loss of approximately 15.57% during this period. The stock’s intraday low of ₹255.15 on 21-Nov highlights the persistent selling momentum. This decline is in line with the broader Steel/Sponge Iron/Pig Iron sector, which has also experienced a downturn of 2.61% on the same day. However, Surya Roshni’s underperformance is more pronounced when compared to benchmark indices such as the Sensex, which has posted modest gains of 0.79% over the past week and 0.95% over the past month.

Trading volumes further underscore the bearish sentiment, with the weighted average price skewed towards the lower end of the day’s range, indicating that more shares were exchanged near the lows. Additionally, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling a sustained downtrend. Investor participation appears to be waning as well, with delivery volumes on 20-Nov falling by 4.05% relative to the five-day average, suggesting reduced conviction among buyers.

Financial Performance and Valuation Concerns

Despite a strong ability to service debt, as evidenced by a low Debt to EBITDA ratio of 0.61 times, Surya Roshni’s financial growth metrics have been underwhelming. The company’s net sales have grown at a modest annual rate of 8.35% over the past five years, which is considered poor for a firm of its size and sector. The latest half-year results ending September 2025 reveal a Return on Capital Employed (ROCE) of 17.67%, the lowest recorded, and a quarterly Profit Before Tax excluding other income (PBT less OI) of ₹77.08 crores, which has declined by 12.7% compared to the average of the previous four quarters.

Valuation metrics further dampen investor enthusiasm. The stock trades at a Price to Book Value of 2.2, which is expensive relative to its peers’ historical averages. Its Return on Equity (ROE) stands at 13.1%, but the company’s Price/Earnings to Growth (PEG) ratio is a steep 7.6, signalling that the stock’s price is not justified by its earnings growth. Over the past year, Surya Roshni’s stock has generated a negative return of 9.60%, while profits have only marginally increased by 2.2%, underscoring the disconnect between price and fundamentals.

Investor confidence is further reflected in the limited stake held by domestic mutual funds, which own just 1.56% of the company. Given their capacity for detailed research, this small holding may indicate reservations about the company’s valuation or business prospects.

Long-Term Performance and Market Comparison

While Surya Roshni has delivered impressive returns over the longer term—117.93% over three years and 286.54% over five years—its recent performance has lagged significantly behind the broader market. The Sensex has gained 10.47% over the past year and 9.08% year-to-date, whereas Surya Roshni’s stock has declined by 9.60% and 13.44% respectively during these periods. This underperformance is also evident when compared to the BSE500 index, which has returned 8.59% in the last year, highlighting the stock’s relative weakness.

In summary, Surya Roshni’s share price decline as of 21-Nov is driven by a combination of weak recent financial results, expensive valuation metrics, subdued investor participation, and broader sectoral weakness. Despite a solid debt servicing capacity, the company’s modest sales growth, declining profitability, and premium valuation have weighed heavily on investor sentiment, resulting in sustained selling pressure.

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