Why is Ashika Credit falling/rising?

Recent Price Movement and Market Performance

The stock has been under pressure for several days, recording a consecutive three-day fall with a cumulative loss of 2.96%. On 12-Dec, it opened sharply lower with a gap down of 7.88%, signalling immediate bearish sentiment among investors. Intraday volatility was high at 6.42%, with the share price swinging within a wide range of ₹39.2. The stock also hit a new 52-week low of ₹285.8 during the session, marking a significant technical weakness.

Trading volumes have also shown signs of waning investor participation, with delivery volumes on 11-Dec falling by 9.25% compared to the five-day average. The weighted average price indicates that more shares were traded closer to the day’s low, suggesting selling pressure dominated the session. Furthermore, Ashika Credit is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – reinforcing the bearish technical outlook.

Contrasting Earnings Growth and Promoter Confidence

Despite the recent price weakness, Ashika Credit has reported encouraging financial results in the near term. The company posted a net profit growth of 22.22% in the quarter ending September 2025, marking two consecutive quarters of positive earnings. Net sales for the latest six months surged by 147.36% to ₹88.01 crores, while profit before tax excluding other income rose by an impressive 456.0% compared to the previous four-quarter average. The quarterly profit after tax also expanded by 417.4%, signalling operational improvements.

Adding to the positive sentiment, promoters have increased their stake by 7.11% over the previous quarter, now holding 57.99% of the company. This rise in promoter shareholding typically reflects confidence in the company’s future prospects and can be a reassuring factor for investors.

Long-Term Challenges and Market Underperformance

However, these short-term positives are overshadowed by significant long-term concerns. The company’s average return on equity (ROE) stands at a modest 9.08%, indicating limited efficiency in generating shareholder returns. More troubling is the steep decline in operating profit, which has contracted at an annualised rate of 251.99%, signalling deteriorating core business performance over time.

Additionally, Ashika Credit’s earnings before interest, taxes, depreciation and amortisation (EBITDA) have been negative, raising questions about the sustainability of its profitability. The stock’s valuation appears risky relative to its historical averages, especially given that over the past year, the share price has plummeted by 64.05%, while profits have fallen by 146.9%. This stark underperformance contrasts sharply with the broader market, where the BSE500 index has delivered a positive 1.78% return over the same period.

Such a divergence highlights the challenges Ashika Credit faces in regaining investor confidence and market share. The stock’s liquidity remains adequate for moderate trade sizes, but the falling delivery volumes and persistent price declines suggest cautious sentiment among market participants.

Conclusion: A Stock Caught Between Short-Term Gains and Long-Term Risks

In summary, Ashika Credit Capital Ltd’s share price decline on 12-Dec reflects a complex interplay of factors. While recent quarterly results and increased promoter confidence offer some optimism, the stock remains weighed down by weak long-term fundamentals, negative EBITDA, and significant underperformance relative to the broader market. The technical indicators and trading patterns suggest that investors remain cautious, with selling pressure dominating in the near term.

For investors, the key consideration is whether the company can translate its recent earnings growth into sustainable profitability and improve its operating metrics over time. Until then, the stock’s volatility and fundamental challenges are likely to keep it under pressure despite occasional positive news flow.

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