Stock Price Movement and Market Context
On the day the new low was recorded, the stock marginally outperformed its sector peers by 1.86%, despite trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This indicates sustained downward pressure on the stock price over multiple time horizons. The stock’s 52-week high stood at Rs.32.50, highlighting a steep decline of over 54% from its peak within the last year.
The broader market context was also subdued, with the Sensex opening 385.82 points lower and trading at 81,652.57, down 0.64%. The Sensex itself has been on a three-week losing streak, shedding 4.79% in that period. While the Sensex trades below its 50-day moving average, the 50DMA remains above the 200DMA, signalling a mixed technical outlook for the benchmark index.
Financial Performance and Fundamental Metrics
North Eastern Carrying Corporation Ltd’s financial indicators reflect ongoing pressures. The company’s long-term fundamentals remain weak, with an average Return on Capital Employed (ROCE) of 6.32%, which is below industry standards. Over the last five years, net sales have grown at a modest annual rate of 2.31%, while operating profit has increased at 11.62% annually, indicating limited growth momentum.
Debt servicing capacity is a concern, with a high Debt to EBITDA ratio of 5.28 times, suggesting elevated leverage relative to earnings before interest, tax, depreciation, and amortisation. This ratio points to potential constraints on financial flexibility.
Recent Quarterly Results
The company has reported negative results for three consecutive quarters, including the latest quarter ending March 2025. Profit after tax (PAT) for the latest six months stood at Rs.3.60 crore, reflecting a decline of 44.95% compared to the previous period. Meanwhile, interest expenses have increased by 48.44% to Rs.4.75 crore over the same timeframe, further pressuring net profitability.
The half-year ROCE has deteriorated to a low of 4.83%, underscoring the subdued returns generated on capital employed in the near term.
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Long-Term and Recent Performance Comparison
Over the past year, North Eastern Carrying Corporation Ltd has delivered a total return of -51.77%, significantly underperforming the Sensex, which gained 7.63% during the same period. The stock has also lagged behind the BSE500 index across three years, one year, and three months, indicating persistent underperformance relative to broader market benchmarks.
Profitability has also declined sharply, with profits falling by 38.8% over the last year. This combination of weak returns and declining earnings has contributed to the stock’s current valuation and market sentiment.
Valuation and Market Capitalisation
Despite the challenges, the stock’s valuation metrics suggest it is trading at a discount relative to its peers. The company’s Enterprise Value to Capital Employed ratio stands at 0.8, which is considered very attractive compared to historical averages within the transport services sector. This lower valuation reflects market caution given the company’s financial profile and recent results.
The company holds a Market Cap Grade of 4, indicating a relatively modest market capitalisation within its sector. The Mojo Score assigned is 15.0, with a Mojo Grade of Strong Sell as of 1 February 2025, an upgrade from the previous Sell rating. This grading reflects the assessment of the company’s financial health, growth prospects, and market position.
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Shareholding and Sector Overview
The majority shareholding in North Eastern Carrying Corporation Ltd is held by promoters, indicating concentrated ownership. The company operates within the transport services sector, which has faced various headwinds in recent times, including fluctuating demand and cost pressures.
While the stock has recently gained after three consecutive days of decline, it remains below all major moving averages, signalling that the downward trend has not yet been decisively reversed.
Summary of Key Metrics
To summarise, the stock’s 52-week low of Rs.14.64 reflects a combination of subdued financial performance, elevated leverage, and broader market weakness. The company’s declining profitability, negative quarterly results, and underwhelming growth rates have contributed to the current valuation and market sentiment.
Despite these challenges, the stock’s valuation metrics indicate it is trading at a discount relative to peers, which may be a factor for market participants to consider in the context of sector dynamics and company fundamentals.
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