Godavari Drugs Stock Falls to 52-Week Low of Rs.78.06 Amidst Continued Downtrend

The pharmaceutical and biotechnology company’s shares have been under pressure, recording losses for two consecutive sessions and delivering a cumulative return of -5.55% over this period. This recent decline has positioned the stock well below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling sustained weakness in price momentum.

In contrast to Godavari Drugs’ performance, the broader market has shown resilience. The Sensex opened higher at 85,470.92 points, gaining 284.45 points or 0.33%, and reached a new 52-week high of 85,462.24 during the trading session. The index is trading above its 50-day moving average, which itself is positioned above the 200-day moving average, reflecting a bullish trend in the mega-cap dominated market.

Over the past year, Godavari Drugs has recorded a return of -31.66%, significantly lagging behind the Sensex’s 10.17% gain during the same period. The stock’s 52-week high was Rs.133.90, highlighting the extent of the recent price erosion. This underperformance extends beyond the last year, with the stock also trailing the BSE500 index over the last three years, one year, and three months.

Financially, the company’s recent results have reflected subdued performance. Net sales for the nine-month period stand at Rs.75.96 crores, showing a contraction of -21.64%. Profit after tax (PAT) for the same period is Rs.2.93 crores, with a decline of -45.83%. Operating cash flow for the year is reported at Rs.11.20 crores, marking the lowest level in recent times.

Long-term growth metrics also indicate challenges. The compound annual growth rate (CAGR) for net sales over the past five years is -0.27%, pointing to a lack of expansion in revenue streams. Additionally, the company’s debt servicing capacity is constrained, with a Debt to EBITDA ratio of 3.27 times, suggesting elevated leverage relative to earnings before interest, taxes, depreciation, and amortisation.

Return on capital employed (ROCE) stands at 9.1%, which, while modest, is accompanied by an enterprise value to capital employed ratio of 1.2. This valuation metric indicates that the stock is trading at a discount relative to its peers’ historical averages, despite the subdued financial performance.

Promoters remain the majority shareholders of Godavari Drugs, maintaining significant control over the company’s strategic direction. Despite the current valuation discount, the stock’s recent financial and price trends reflect a period of subdued performance relative to both sector peers and broader market indices.

In summary, Godavari Drugs’ stock has reached a notable low point at Rs.78.06, reflecting a combination of declining sales, reduced profitability, and elevated leverage. While the broader market environment remains positive, the company’s share price continues to face downward pressure, trading below all major moving averages and underperforming key benchmarks over multiple time horizons.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →