Shares of Essen Speciality Foods Ltd. experienced meaningful volatility on September 12, 2024, plummeting as much as 17.7% during intraday trading before partially recovering to close down 11.8% at ₹228.95 on the Bombay Stock Exchange. The decline follows a recent surge in the stock price, raising questions about the factors driving the current downturn.
The stock’s recent performance has been closely watched by investors, particularly after a period of gains fueled by positive market sentiment and company-specific developments. Essen Speciality Foods, a manufacturer of cocoa products, has seen increased investor interest due to rising global cocoa prices and anticipated benefits from capacity expansion. Though, profit booking and an overall negative market outlook contributed to today’s sell-off, impacting shareholders and potentially influencing future investment decisions.
According to exchange data, the stock opened at ₹260.00 and touched a low of ₹216.20 before closing at ₹228.95. This volatility comes after a 52-week high of ₹278.80 reached earlier in the month. Analysts attribute the fall to a combination of factors, including concerns about high valuations and a broader correction in the market.
The company’s recent financial performance shows a consistent growth in revenue and profitability. In the fiscal year 2023, Essen Speciality Foods reported a revenue of ₹738.4 crore, a 22.5% increase from the previous year. Net profit for the same period stood at ₹68.2 crore, up from ₹52.1 crore in fiscal year 2022. The company has been investing in expanding its production capacity to meet growing demand,with a new facility expected to be operational by the end of 2024.
Global cocoa prices have been on an upward trajectory due to supply concerns stemming from adverse weather conditions in West Africa, a major cocoa-producing region. This has positively impacted companies like Essen Speciality Foods, which rely on cocoa as a primary raw material. However, the sustainability of these high prices remains a key concern for investors.
