Why is Anjani Foods falling/rising?

Recent Price Movement and Market Comparison

Over the past week, Anjani Foods has experienced a significant downturn, falling by 7.41%, in stark contrast to the Sensex’s modest gain of 0.65% during the same period. Although the stock posted a slight positive return of 1.85% over the last month, this marginal outperformance barely keeps pace with the Sensex’s 1.43% rise. More concerning is the year-to-date performance, where the stock has plummeted by 37.23%, while the Sensex has advanced by 8.96%. This trend extends to the one-year horizon, with Anjani Foods declining 33.29% against the Sensex’s 6.09% gain, and over three years, the stock has lost 24.14% compared to the Sensex’s robust 35.42% growth. Even over five years, the company’s 24.93% return falls well short of the benchmark’s 90.82% appreciation.

Technical Indicators and Trading Activity

On the trading day of 02-Dec, Anjani Foods underperformed its sector by 1.96%, continuing a three-day losing streak that has resulted in a cumulative decline of 5.71%. The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling persistent bearish momentum. Notably, investor participation has increased, with delivery volumes on 01-Dec rising by 40.61% compared to the five-day average, indicating heightened trading interest despite the downward price pressure. Liquidity remains adequate, allowing for reasonable trade sizes without significant market impact.

Fundamental Weaknesses Impacting Investor Sentiment

Despite an attractive valuation indicated by a Return on Capital Employed (ROCE) of 8.5% and an enterprise value to capital employed ratio of 2.8, Anjani Foods’ fundamentals have been underwhelming. The company’s profits have declined by 29.2% over the past year, which aligns with the stock’s negative return of 33.29% during the same timeframe. The majority ownership by promoters has not translated into strong operational performance, as evidenced by weak long-term financial metrics.

Long-Term Growth and Profitability Concerns

Over the last five years, Anjani Foods has demonstrated modest growth, with net sales increasing at an annual rate of 10.86% and operating profit growing at 6.15%. However, these figures are insufficient to inspire confidence, especially given the company’s poor ability to service debt, reflected in an average EBIT to interest coverage ratio of just 1.36. This weak debt servicing capacity raises concerns about financial stability and operational resilience.

The company’s quarterly earnings per share (EPS) have also been disappointing, with the latest quarter reporting an EPS of merely ₹0.01, signalling flat results and limited profitability. This underperformance is consistent with the stock’s failure to keep pace with broader market indices such as the BSE500 over multiple time horizons, including the last three years, one year, and three months.

Conclusion: Why Anjani Foods Is Falling

The decline in Anjani Foods’ share price on 02-Dec is a reflection of sustained weak fundamentals, poor profitability, and consistent underperformance relative to market benchmarks. The stock’s inability to generate positive returns over the medium to long term, coupled with flat recent earnings and inadequate debt servicing capacity, has dampened investor confidence. Technical indicators reinforce the bearish sentiment, with the stock trading below all major moving averages and experiencing consecutive days of losses. Although the valuation appears attractive on certain metrics, the broader financial health and growth prospects remain questionable, leading to continued selling pressure.

Investors should carefully weigh these factors when considering exposure to Anjani Foods, especially given the availability of potentially stronger alternatives within the FMCG sector and beyond.

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 →