Stock Price Movement and Market Context
On the trading day, Karma Energy Ltd opened with a gap down of 2.82%, continuing its slide to touch an intraday low of Rs.37.67, representing a 4.29% decline from the previous close. This performance lagged the power sector by 4.93%, underscoring the stock’s relative weakness. The share price currently trades below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained bearish trend.
In contrast, the Sensex opened flat and traded marginally lower by 0.16%, standing at 82,211.46 points, approximately 4.8% below its 52-week high of 86,159.02. While the Sensex remains below its 50-day moving average, the 50DMA itself is positioned above the 200DMA, indicating a mixed but relatively stable broader market environment.
Long-Term Price Performance
Over the past year, Karma Energy Ltd’s stock has depreciated by 38.50%, a stark contrast to the Sensex’s positive return of 7.42% during the same period. The stock’s 52-week high was Rs.88, highlighting the extent of the decline. This underperformance extends beyond the last year, with the stock lagging the BSE500 index over the last three years, one year, and three months, reflecting persistent challenges in maintaining investor confidence and market valuation.
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Financial and Fundamental Analysis
Karma Energy Ltd’s financial indicators reveal ongoing difficulties. The company’s long-term operating profit growth has contracted at a compound annual growth rate (CAGR) of -26.72% over the last five years, indicating a weakening earnings base. This decline in operating profits has contributed to the stock’s current valuation challenges.
The company’s ability to service its debt remains constrained, with an average EBIT to interest ratio of -1.14, signalling that earnings before interest and tax are insufficient to cover interest expenses. This ratio points to financial stress and raises concerns about the sustainability of the company’s capital structure.
Profitability metrics also remain subdued. The average return on equity (ROE) stands at 2.42%, reflecting limited returns generated on shareholders’ funds. This low profitability per unit of equity investment has weighed on investor sentiment and valuation multiples.
Recent Earnings and Profitability Trends
The company reported flat results for the six months ending September 2025, with a profit after tax (PAT) of Rs.1.11 crore, representing a decline of 54.08% compared to the previous period. This contraction in net profit further compounds concerns about the company’s near-term earnings momentum.
Despite the stock’s negative price performance, reported profits have risen by 32% over the past year, resulting in a price-to-earnings-to-growth (PEG) ratio of 41.6. This elevated PEG ratio suggests that the stock’s price decline has outpaced earnings growth, reflecting market scepticism about the quality and sustainability of profit gains.
Valuation and Risk Profile
Karma Energy Ltd’s stock is currently trading at valuations considered risky relative to its historical averages. The combination of weak earnings growth, low profitability, and debt servicing challenges has contributed to a Mojo Score of 12.0 and a Mojo Grade of Strong Sell, upgraded from Sell on 1 August 2025. The company’s market capitalisation grade is rated 4, indicating a micro-cap status with limited liquidity and market presence.
These factors collectively have led to the stock’s underperformance relative to both its sector and broader market indices, reinforcing the cautious stance reflected in its grading.
Shareholding and Corporate Structure
The majority shareholding in Karma Energy Ltd is held by promoters, who maintain significant control over the company’s strategic direction and governance. This concentrated ownership structure may influence decision-making processes and capital allocation priorities.
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Summary of Key Metrics
To summarise, Karma Energy Ltd’s stock has reached a new 52-week low of Rs.37.67, reflecting a year-long decline of 38.50%. The company’s financial profile is characterised by shrinking operating profits, low return on equity, and insufficient earnings to cover interest expenses. The stock trades below all major moving averages and has underperformed both its sector and the broader market indices.
While the Sensex remains relatively stable and close to its 52-week high, Karma Energy Ltd’s share price trajectory highlights the challenges faced within the power sector micro-cap segment. The company’s Mojo Grade of Strong Sell and a low Mojo Score of 12.0 further illustrate the cautious market view on its current fundamentals and valuation.
Market Position and Outlook
Despite the recent price weakness, Karma Energy Ltd remains a participant in the power sector, which continues to be a critical industry in India’s energy landscape. However, the company’s financial and operational metrics suggest that it is currently facing headwinds that have impacted its market valuation and investor perception.
Investors and market participants will continue to monitor the company’s financial disclosures and market performance closely, given the stock’s recent lows and the broader sector dynamics.
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