Stock Price Movement and Market Context
On the trading day, North Eastern Carrying Corporation Ltd recorded a day change of +1.32%, outperforming its sector by 1.5%, despite hitting this new low price. The stock has reversed its trend after three consecutive days of decline, yet it remains trading below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This persistent weakness in technical indicators reflects ongoing pressure on the stock price.
Meanwhile, the broader market showed mixed signals. The Sensex opened lower at 84,778.02, down by 183.12 points (-0.22%), and was trading marginally down at 84,802.72 (-0.19%) during the session. The index remains 1.6% below its 52-week high of 86,159.02. Notably, the Sensex is trading below its 50-day moving average, although the 50DMA remains above the 200DMA, indicating some underlying market resilience.
Long-Term Performance and Valuation Metrics
Over the past year, North Eastern Carrying Corporation Ltd has delivered a negative return of -46.71%, significantly underperforming the Sensex, which posted an 8.51% gain over the same period. The stock’s 52-week high was Rs.37.02, highlighting the extent of the decline. This underperformance extends beyond the last year, with the company lagging behind the BSE500 index over the last three years, one year, and three months.
From a valuation standpoint, the company’s enterprise value to capital employed ratio stands at a low 0.9, suggesting a very attractive valuation relative to its capital base. This valuation discount is notable when compared to peers’ average historical valuations within the Transport Services sector.
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Financial Health and Profitability Concerns
The company’s financial metrics reveal several areas of concern. Its long-term fundamental strength is 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 also under pressure, with a high Debt to EBITDA ratio of 5.28 times, signalling elevated leverage and potential strain on cash flows. The company has reported negative results for three consecutive quarters, including the latest quarter ending March 2025, marking a continuation of subdued profitability.
In the latest six-month period, the company’s Profit After Tax (PAT) stood at Rs.3.60 crores, reflecting a decline of -44.95%. Meanwhile, interest expenses have risen sharply by 48.44% to Rs.4.75 crores, further impacting net profitability. The half-year ROCE has dropped to a low of 4.83%, underscoring the challenges in generating adequate returns on capital employed.
Comparative Performance and Shareholding
North Eastern Carrying Corporation Ltd’s performance has been below par not only in the recent quarters but also over the long term. Its returns have lagged behind the broader BSE500 index across multiple time frames, including three years, one year, and three months. This persistent underperformance has contributed to the stock’s decline to its current 52-week low.
The company’s majority shareholding remains with promoters, maintaining a stable ownership structure despite the stock’s price volatility.
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Summary of Key Metrics
To summarise, North Eastern Carrying Corporation Ltd’s stock has declined to Rs.17.5, its lowest level in the past 52 weeks, reflecting a combination of subdued financial performance, elevated leverage, and limited growth prospects. The company’s Mojo Score stands at 15.0, with a Mojo Grade of Strong Sell as of 1 Feb 2025, downgraded from Sell, indicating a cautious stance based on fundamental and market data.
Despite the stock’s recent outperformance relative to its sector on the day of the new low, the overall trend remains negative, with the share price trading below all key moving averages and continuing to underperform major indices and peer groups.
Market Capitalisation and Sector Positioning
The company holds a Market Cap Grade of 4, reflecting its mid-tier market capitalisation within the Transport Services sector. While the sector itself has shown resilience, North Eastern Carrying Corporation Ltd’s relative performance has lagged, contributing to its current valuation discount.
Investors and analysts will continue to monitor the company’s financial disclosures and market movements closely, given the ongoing challenges reflected in its recent results and stock price trajectory.
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