Kalyani Forge Gains 9.26%: 2 Key Factors Driving the Weekly Surge

Feb 09: Downgrade to Strong Sell Reflects Heightened Risks

On 9 February 2026, Kalyani Forge’s stock opened and closed flat at Rs.606.00, while the Sensex gained 1.04%. The lack of price movement belied a significant development as MarketsMOJO downgraded the stock to a Strong Sell rating, citing deteriorating financials and bearish technical indicators. The company’s Mojo Score fell to 28.0, signalling increased caution.

The downgrade was driven by weak profitability metrics, including a modest average Return on Equity (ROE) of 5.67% and a concerning EBIT to Interest coverage ratio of 1.61, highlighting challenges in servicing debt. The recent quarterly Profit Before Tax excluding Other Income plunged by 60.05% to ₹1.71 crore, while interest expenses rose 35.47% to ₹6.76 crore over nine months, underscoring financial strain.

Technically, the stock exhibited bearish momentum with negative MACD readings on weekly charts and bearish Bollinger Bands, reinforcing the downgrade. Despite trading at an attractive EV/CE ratio of 1.7 and a reasonable ROCE of 9.1%, the stock’s underperformance relative to the BSE500 index over the past year (-5.31% vs +7.71%) reflected market scepticism.

Feb 10-11: Mixed Price Movements Amid Market Stability

On 10 February, the stock rose modestly by 0.99% to Rs.612.00, outperforming the Sensex’s 0.25% gain. This slight uptick came despite no new company-specific news, possibly reflecting bargain hunting following the downgrade. However, on 11 February, the stock corrected sharply, falling 2.08% to Rs.599.30, while the Sensex inched up 0.13%. The decline coincided with increased volume, suggesting profit-taking or cautious sentiment among investors.

Feb 12: Q3 FY26 Results Show Margin Recovery but Profitability Concerns Persist

Kalyani Forge’s Q3 FY26 results, released on 12 February, revealed a mixed picture. The company reported margin recovery, signalling operational improvements. However, profitability remained a concern as net sales declined by 10.69% to ₹55.67 crore, and profit before tax excluding other income dropped sharply. The results underscored ongoing challenges in demand and cost pressures within the castings and forgings sector.

Despite these concerns, the stock rebounded 1.95% to Rs.611.00 on the day, outperforming the Sensex which fell 0.56%. The positive price reaction suggested some investor optimism about the margin improvement, even as caution prevailed regarding overall earnings quality.

Feb 13: Sharp Rally on Heavy Volume Caps the Week

The week concluded with a strong rally on 13 February, as Kalyani Forge surged 8.36% to close at Rs.662.10, its highest level of the week. This sharp gain came on a significant volume increase to 952 shares, indicating robust buying interest. In contrast, the Sensex declined 1.40%, highlighting the stock’s clear outperformance.

This late-week surge may reflect short-covering or renewed speculative interest following the Q3 results and the earlier downgrade, as investors reassessed the stock’s risk-reward profile. The closing price marked a 9.26% gain for the week from the opening Rs.606.00, underscoring a volatile but ultimately positive price trajectory.

Daily Price Performance vs Sensex

Key Takeaways

Positive Signals: The stock’s 9.26% weekly gain amid a declining Sensex highlights strong relative strength and renewed investor interest, particularly following the Q3 margin recovery. The sharp rally on 13 February on heavy volume suggests potential short-covering or speculative buying.

Cautionary Signals: The downgrade to Strong Sell reflects significant financial and technical weaknesses, including low profitability, rising interest costs, and bearish momentum indicators. The Q3 results, while showing margin improvement, also revealed declining sales and persistent profitability challenges, underscoring ongoing operational risks.

Valuation and Market Context: Despite attractive valuation metrics such as a low EV/CE ratio, the stock’s underperformance over the past year and weak fundamentals justify the cautious stance. The divergence between strong short-term price gains and underlying financial stress suggests volatility may continue.

Conclusion

Kalyani Forge Ltd’s week was marked by a striking contrast between fundamental weakness and strong price performance. The downgrade to Strong Sell on 9 February highlighted deteriorating financial health and bearish technicals, signalling elevated risks. However, the Q3 FY26 results on 12 February, showing margin recovery, coupled with a sharp price rally on 13 February, propelled the stock to a 9.26% weekly gain, significantly outperforming the Sensex’s 0.54% decline.

This volatility reflects a market grappling with mixed signals: operational challenges and financial strain on one hand, and improving margins and speculative interest on the other. Investors should remain vigilant, monitoring upcoming financial disclosures and technical developments to gauge whether the recent rally can be sustained or if the bearish fundamentals will reassert dominance.

Unlock special upgrade rates for a limited period. Start Saving Now →