Stock Performance and Market Context
The stock’s latest low of Rs.2.79 represents a sharp fall from its 52-week high of Rs.5.10, underscoring a 45.3% decline over the period. This downturn contrasts starkly with the broader market, as the Sensex has delivered a positive return of 7.38% over the same timeframe. Furthermore, the Sensex is currently experiencing a three-week consecutive decline, down by 5.01%, trading at 81,467.70 points after a negative opening.
Nandan Denim’s share price is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum. Despite the stock outperforming its sector by 1.29% on the day of the new low, the broader trend remains subdued.
Financial Metrics and Fundamental Assessment
The company’s long-term fundamental strength remains weak, as reflected in its average Return on Capital Employed (ROCE) of 8.35%, which is modest relative to industry standards. The Debt to EBITDA ratio stands at 3.02 times, indicating a relatively high leverage position that may constrain financial flexibility.
Operating cash flow for the fiscal year is reported at Rs.95.07 crores, the lowest level recorded, while the Profit After Tax (PAT) for the nine-month period has declined by 27.94% to Rs.31.26 crores. Net sales for the most recent quarter fell by 19.0% to Rs.784.69 crores compared to the previous four-quarter average, highlighting challenges in revenue generation.
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Relative Performance and Valuation
Over the last year, Nandan Denim has generated a negative return of 39.45%, underperforming the BSE500 index across multiple time horizons including the last three years, one year, and three months. This underperformance reflects persistent challenges in both top-line and bottom-line growth.
Despite these headwinds, the company’s valuation metrics present a contrasting picture. With a ROCE of 8.6 and an enterprise value to capital employed ratio of 0.7, the stock is trading at a discount relative to its peers’ historical valuations. This valuation gap suggests that the market is pricing in the company’s current difficulties, while recognising its capital base.
Shareholding and Sectoral Position
The majority shareholding remains with the promoters, maintaining control over strategic decisions. Operating within the garments and apparels sector, Nandan Denim faces sector-specific pressures that have contributed to its subdued sales and profitability trends.
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Summary of Key Financial Indicators
The company’s financial profile is characterised by a combination of declining profitability and subdued sales growth. The PAT contraction of 27.94% over nine months and a 19.0% fall in quarterly net sales highlight the pressures on earnings. The operating cash flow at Rs.95.07 crores remains at a low level, reflecting limited cash generation capacity.
Leverage remains a concern with a Debt to EBITDA ratio of 3.02 times, which may impact the company’s ability to manage its financial obligations efficiently. The Mojo Score of 17.0 and a downgrade from Hold to Strong Sell on 3 November 2025 further underline the cautious stance on the stock’s outlook.
Market and Sector Dynamics
The garments and apparels sector has experienced volatility, with Nandan Denim’s performance lagging behind sector averages. The stock’s discount valuation relative to peers indicates market apprehension about near-term prospects, despite the company’s capital employed metrics suggesting some underlying value.
Sensex’s recent weakness, trading below its 50-day moving average but with the 50DMA still above the 200DMA, reflects broader market uncertainty that may be influencing sentiment towards stocks like Nandan Denim.
Conclusion
Nandan Denim Ltd’s share price reaching a 52-week low of Rs.2.79 encapsulates a period of sustained underperformance and financial strain. The company’s declining sales, reduced profitability, and elevated leverage have contributed to this trend. While valuation metrics indicate a discount relative to peers, the stock remains under pressure amid a challenging sector environment and broader market weakness.
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