Why is Cohance Lifesciences Ltd falling/rising?

Recent Price Movements and Market Performance

The stock has been under pressure for several weeks, with a one-month return of -30.41% compared to the Sensex’s modest decline of -2.49%. Year-to-date, the stock has fallen by 32.46%, significantly underperforming the benchmark index which is down only 2.24%. Over the past year, the stock’s performance has been particularly weak, plunging 68.32% while the Sensex gained 6.44%. Even over longer horizons such as three and five years, Cohance Lifesciences has lagged behind the broader market, delivering negative returns of 26.35% and 27.90% respectively, against Sensex gains of 36.94% and 64.22%.

On 05-Feb, the stock hit a new 52-week low of ₹339.80, marking a 7.35% intraday decline. The weighted average price indicates that most trading volume occurred near this low, signalling selling pressure. The stock has also been trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – reinforcing the bearish technical outlook. Notably, the stock has declined for two consecutive days, losing 6.34% in that period and underperforming its sector by 2.58% on the day.

Financial Performance and Valuation Concerns

Despite a high management efficiency indicated by a return on equity (ROE) of 21.07%, the company’s long-term growth metrics paint a less favourable picture. Operating profit has grown at a modest annual rate of 4.15% over the past five years, which is relatively weak for a company in the lifesciences sector. The latest financial results for the period ending September 2025 reveal troubling trends: operating cash flow stood at a low ₹301.03 crores, profit before tax excluding other income dropped sharply by 42.4% to ₹68.17 crores compared to the previous four-quarter average, and net profit after tax for the latest six months declined by 39.7% to ₹128.95 crores.

Valuation metrics also raise caution. The stock trades at a price-to-book value of 3.6, which is considered expensive relative to its ROE of 9.1. While the valuation is broadly in line with peers’ historical averages, the disconnect between price and earnings growth is evident given the stock’s steep 68.32% loss over the past year despite a 9.5% rise in profits during the same period.

Promoter Share Pledging and Market Sentiment

One of the most significant concerns weighing on investor sentiment is the fact that 100% of promoter shares are pledged. In volatile or falling markets, high promoter pledging often exacerbates downward pressure on stock prices as lenders may liquidate shares to cover margin calls. This factor likely contributes to the stock’s recent weakness and heightened volatility.

Additionally, rising investor participation has been observed, with delivery volumes on 04-Feb increasing by 23.87% compared to the five-day average. However, this increased activity has coincided with price declines, suggesting that selling interest currently outweighs buying demand.

Conclusion: Why the Stock is Falling

The decline in Cohance Lifesciences Ltd’s share price on 05-Feb is the result of a combination of weak financial performance, expensive valuation relative to earnings growth, and market concerns over promoter share pledging. The company’s poor long-term growth trajectory, highlighted by subdued operating profit increases and recent negative quarterly results, has failed to inspire investor confidence. This is compounded by the stock’s consistent underperformance against the Sensex and sector benchmarks over multiple time frames.

Technical indicators reinforce the bearish outlook, with the stock trading below all major moving averages and hitting new 52-week lows. Although management efficiency remains strong, the broader financial and market context suggests that investors are cautious, leading to sustained selling pressure. Until the company can demonstrate improved profitability and reduce promoter pledging risks, the stock is likely to remain under pressure.

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