Why is Aaron Industries Ltd falling/rising?

Recent Price Movement and Market Context

The stock hit a new 52-week low of ₹168.02 on the day, signalling persistent selling pressure. It underperformed its sector by 3.11% today and is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. Such technical indicators suggest a bearish trend with limited immediate support levels. Despite this, investor participation has risen, with delivery volumes on 26 Dec increasing by 48.24% compared to the five-day average, indicating heightened trading activity amid the decline.

Long-Term and Short-Term Returns Paint a Bleak Picture

Examining the stock’s returns against the Sensex benchmark reveals a stark contrast. Over the past week, Aaron Industries declined by 6.98%, significantly worse than the Sensex’s modest 0.88% fall. The one-month performance shows a 9.20% drop versus a 1.00% decline in the Sensex. Most notably, the stock’s year-to-date return is a steep negative 52.34%, while the Sensex has gained 9.72%. Over the last year, Aaron Industries has lost 55.83%, in sharp contrast to the Sensex’s 8.94% gain. Even over three years, the stock has marginally declined by 1.04%, while the Sensex surged 42.61%. These figures underscore the stock’s sustained underperformance relative to the broader market.

Financial Performance and Valuation Concerns

Despite a high return on capital employed (ROCE) of 19.74%, indicating efficient management, Aaron Industries’ recent financial results have been disappointing. The company reported flat results in September 2025, with profit after tax (PAT) for the latest six months at ₹2.45 crore, reflecting a decline of 33.60%. This contraction in profitability is a significant red flag for investors, especially given the stock’s already weak price performance.

Moreover, the company’s valuation appears stretched, with an enterprise value to capital employed ratio of 5.2, which is considered very expensive. Although the stock trades at a discount compared to its peers’ historical averages, this valuation does not seem justified in light of the declining profits and poor returns. Over the past year, profits have fallen by 3.1%, compounding concerns about the company’s earnings trajectory.

Underperformance Relative to Broader Market and Peers

Aaron Industries has underperformed not only the Sensex but also the BSE500 index over multiple time frames, including the last three years, one year, and three months. This consistent lagging performance highlights structural challenges or market sentiment issues that have weighed on the stock. While the company has demonstrated healthy long-term operating profit growth at an annual rate of 42.75%, this has not translated into sustained shareholder returns in recent years.

Conclusion: Why Aaron Industries Is Falling

The decline in Aaron Industries’ share price on 29-Dec is primarily attributable to a combination of weak recent financial results, notably the 33.60% drop in PAT over six months, and sustained underperformance relative to market benchmarks. The stock’s technical indicators, including trading below all major moving averages and hitting a new 52-week low, reinforce the bearish sentiment. Despite strong management efficiency and long-term operating profit growth, the expensive valuation and falling profits have eroded investor confidence. Consequently, the stock has delivered negative returns over the past year and year-to-date, far lagging the Sensex and broader market indices. These factors collectively explain the current downward pressure on Aaron Industries’ share price.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →