Karma Energy Stock Falls to 52-Week Low of Rs.37.95 Amidst Weak Financial Metrics

Stock Performance and Market Context

On 28 Jan 2026, Karma Energy’s shares fell to Rs.37.95, underperforming its sector by 2.55% on the day. This new low contrasts sharply with the stock’s 52-week high of Rs.86.93, reflecting a substantial depreciation of over 56% from its peak. The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling persistent downward momentum.

In comparison, the Sensex index demonstrated resilience, closing at 82,392.10, up 0.65% and just 4.57% shy of its own 52-week high of 86,159.02. While the Sensex trades below its 50-day moving average, the 50DMA remains above the 200DMA, indicating a generally positive medium-term trend for the broader market. Mega-cap stocks led the gains, contrasting with the weaker performance of Karma Energy.

Financial Performance and Profitability Concerns

Karma Energy’s financial metrics reveal challenges that have contributed to the stock’s decline. The company’s long-term operating profit growth has contracted at a compound annual growth rate (CAGR) of -26.72% over the past five years, indicating sustained pressure on core earnings. The latest six-month period ending September 2025 showed a PAT of Rs.1.11 crore, which has decreased by 54.08%, underscoring recent profitability pressures.

The company’s ability to service its debt remains weak, 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 is a critical indicator of financial health, and a negative figure highlights ongoing strain in meeting debt obligations.

Return on Equity (ROE) has averaged a modest 2.42%, reflecting limited profitability relative to shareholders’ funds. This low ROE suggests that the company has struggled to generate meaningful returns for its investors over time.

Valuation and Risk Profile

The stock’s valuation metrics further illustrate its risk profile. Despite a 32% increase in profits over the past year, Karma Energy’s stock has declined by 35.43% during the same period. This divergence is reflected in a PEG ratio of 38.8, indicating that the stock is trading at a high price relative to its earnings growth, which may be perceived as risky by market participants.

Over the last three years, one year, and three months, Karma Energy has consistently underperformed the BSE500 index, highlighting its below-par performance relative to a broad market benchmark. This sustained underperformance has contributed to the stock’s current weak standing.

Shareholding and Market Sentiment

The majority shareholding remains with the company’s promoters, which can influence strategic decisions and market perceptions. However, the stock’s Mojo Score stands at 12.0 with a Mojo Grade of Strong Sell as of 1 Aug 2025, downgraded from a previous Sell rating. The Market Cap Grade is 4, indicating a relatively small market capitalisation compared to larger peers in the sector.

Summary of Key Metrics

Karma Energy’s stock price at Rs.37.95 represents a significant decline from its 52-week high of Rs.86.93. The company’s financial indicators, including a negative CAGR in operating profits, low ROE, and a negative EBIT to interest ratio, highlight ongoing challenges in profitability and financial stability. The stock’s underperformance relative to the Sensex and BSE500 indices, combined with its trading below all major moving averages, reflects a cautious market stance.

While the broader market and mega-cap stocks have shown strength, Karma Energy’s position remains subdued, with a Mojo Grade of Strong Sell reinforcing the current assessment of the stock’s outlook based on fundamental and valuation factors.

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