Recent Price Movement and Market Underperformance
Angel One’s stock has underperformed markedly against benchmark indices over multiple time frames. In the past week, the share price fell by 8.41%, compared to a modest 0.63% decline in the Sensex. Over the last month, the stock declined 3.31%, while the Sensex gained 2.27%. Year-to-date, Angel One’s shares have dropped 13.72%, in stark contrast to the Sensex’s 8.91% rise. The disparity is even more pronounced over the last year, with the stock falling 23.15% while the Sensex advanced 4.15%. This underperformance signals investor apprehension about the company’s near-term prospects.
Intraday Trading and Investor Participation
On 08-Dec, the stock touched an intraday low of ₹2,522.95, representing a 4.52% decline from previous levels. The weighted average price indicates that a larger volume of shares traded near this low, suggesting selling pressure dominated the session. Although the stock remains above its 50-day, 100-day, and 200-day moving averages, it is trading below its 5-day and 20-day averages, indicating short-term weakness. Furthermore, investor participation has waned, with delivery volumes on 05 Dec falling by 71.67% compared to the five-day average, reflecting reduced enthusiasm among shareholders.
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Fundamental Strengths Contrasted with Recent Weakness
Angel One continues to exhibit strong long-term fundamentals. The company boasts an average Return on Equity (ROE) of 30.19%, underscoring efficient capital utilisation. Its net sales have grown at an annual rate of 38.34%, while operating profit has expanded by 37.53% annually, reflecting healthy growth over the years. The stock’s price-to-book value ratio of 4, combined with an ROE of 13.5, suggests a fair valuation in the context of its sector.
However, these positives are overshadowed by recent financial setbacks. Over the past year, profits have declined sharply by 40.6%, and the stock has generated a negative return of 23.15%. This divergence between long-term strength and short-term weakness has unsettled investors.
Weak Quarterly Results and Declining Profitability
The company has reported negative results for three consecutive quarters, signalling operational challenges. Profit After Tax (PAT) for the nine months ended stood at ₹500.72 crore, down 52.59% compared to the previous period. Net sales for the same period declined by 20.55% to ₹3,398.30 crore. Additionally, Profit Before Tax excluding other income for the latest quarter was ₹291.56 crore, falling 13.8% relative to the average of the preceding four quarters. These figures highlight a clear deterioration in financial performance, which has weighed heavily on the stock price.
Promoter Stake Reduction and Market Sentiment
Adding to investor concerns is the reduction in promoter shareholding. Over the previous quarter, promoters decreased their stake by 6.58%, now holding 28.97% of the company. Such a significant reduction often signals diminished confidence in the company’s near-term outlook and can exacerbate negative sentiment among retail and institutional investors alike.
Comparative Market Performance
While the broader market, represented by the BSE500, has generated a modest 0.62% return over the last year, Angel One’s shares have lagged considerably, delivering a negative 23.15% return. This underperformance relative to peers and benchmarks further explains the stock’s recent decline, as investors seek better-performing alternatives.
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Conclusion: Why Angel One Is Falling
In summary, Angel One’s share price decline on 08-Dec is primarily driven by disappointing recent financial results, including significant drops in profits and sales over the last nine months and three consecutive quarters of negative earnings. The reduction in promoter stake has further dampened investor confidence. Despite strong long-term fundamentals and a history of robust growth, the company’s short-term operational challenges and underperformance relative to market benchmarks have led to selling pressure. The stock’s trading below short-term moving averages and reduced investor participation reinforce the cautious sentiment prevailing among market participants.
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