Why Uflex Share Price is Falling

Share price of Uflex, one of India's largest multinational flexible packaging and solutions companies, crashed over 7% in a single day on 22 February 2023.

The stock has lost over 9% in the past two sessions. While in the past month, the stock has declined 20.5%, largely underperforming benchmark index Sensex, which has lost just 1% during the same period.

The sudden decline has many investors worried. Since 2021, shares of the company have gained big time on the back of high demand for packaged foods, medicine, and other essential goods due to Covid-19.

The rally was further supported in 2022 after the key raw materials for packaging companies started cooling down due to falling specialty paint prices.

So, let's find out why Uflex share price has come under pressure in recent days.

#1 Income tax department raid

The income-tax department on Tuesday 21 February 2023 conducted searches at 64 locations related to packaging company Uflex across the country, including its Noida office.

The search operation is linked to alleged tax evasion by the company by using fake bills to inflate expenditure and suppress income to evade tax.

The searches covered 64 different locations over the allegedly hiding income in several states, including Delhi, Gujarat, West Bengal, Tamil Nadu, Karnataka, Jammu and Kashmir, and Uttar Pradesh.

Any tax-related or financial misappropriation allegations against the company, are yet to be publicly disclosed.

The search operation is still on, and the tax officials have collected much digital evidence, which will be examined in detail.

Following these developments, shares of Uflex plunged over 6% on Tuesday and hit a new 52-week low.

#2 Weak Q3 result

The other reason why Uflex shares are under pressure is due to muted Q3 results.

For the December 2022 quarter, the company reported a 0.6% YoY (year-on-year) rise in revenue at Rs 34.9 billion (bn). It had clocked a revenue of Rs 34.7 bn in the same quarter last year.

The major concern that dampened the market sentiment was the company's net earnings. The company reported a net loss of Rs 854.1 million (m), down from a profit of 3.1 bn in December 2021 quarter.

Losses came on the back of currency devaluation by Egypt. For the December 2022 quarter, the notional foreign exchange losses due to currency devaluation/fluctuations aggregated to Rs 2.3 bn.

Due to higher energy costs in the European Union, rising interest rates and weakened growth momentum in the US and other developed economies, the company's earnings before interest, depreciation and amortization, and tax (EBITDA) after exchange fluctuation came in at Rs 2.7 bn, down 55.2% YoY from Rs 6.2 bn a year back.

To get back to profitable ways, the company is now focusing on its execution capabilities, global manufacturing strategy, and product innovation to deliver growth.

How shares of Uflex have performed recently

On 23 February 2023, Uflex share price fell 1%. Over the past five days, shares of the company have shed 10.9%.

In a month, shares are down 21.5%. While in 2023 so far, the shares are down by 23%.

Uflex touched its 52-week high of Rs 811 on 26 August 2022 and its 52-week low of Rs 431.7 on 22 February 2023.

About Uflex

Uflex is India's largest multinational flexible packaging materials and solution company. It's a leading global player in Polymer Sciences.

Uflex has grown from strength to strength to evolve as a truly Indian multinational with consumers spread across the world.

Uflex today has state of-the-art packaging facilities at multiple locations in India with installed capacity of around 1.4 lakh tonnes per annum (TPA).

It also has packaging film manufacturing facilities in India, UAE, Mexico Egypt, Poland, Russia, and USA with a cumulative capacity of 4.2 lakh TPA.

Integrated within its core business profile are allied businesses like aseptic liquid packaging, engineering, cylinders, holography and chemicals which further gives Uflex an edge over competition.

Uflex offers technologically superior packaging solutions for a wide variety of products such as snack foods, confectionery, sugar, rice, pharmaceuticals, garden fertilisers, plant nutrients, etc.

For more details about the company, you can have a look at Uflex factsheet and quarterly results on our website.

You can also compare Uflex with its peers.

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