Recent Price Movement and Market Comparison
On 16 December, Cosmo First’s shares fell by ₹13.35, marking a 1.88% drop by the close of trading. This decline is part of a broader pattern, with the stock having lost 7.53% over the past four consecutive trading days. The intraday low touched ₹694.25, representing a 2.38% dip from the previous close. This recent weakness contrasts sharply with the broader market, as the Sensex has remained relatively flat, posting marginal gains of 0.02% over the past week and 0.14% over the last month.
Over longer periods, Cosmo First’s performance has been notably disappointing. The stock has delivered a negative return of 27.10% over the past year, while the Sensex gained 3.59% in the same timeframe. Year-to-date, the stock is down 23.74%, whereas the benchmark index has risen by 8.37%. Even over three years, Cosmo First has underperformed significantly, with a modest decline of 4.44% compared to the Sensex’s robust 38.05% gain. Despite this, the five-year return remains positive at 133.65%, outperforming the Sensex’s 81.46%, indicating some historical strength but recent struggles.
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Technical Indicators and Investor Sentiment
Technically, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish trend. This technical weakness is compounded by a sharp decline in investor participation. Delivery volume on 15 December was 27,380 shares, down by 73.65% compared to the five-day average, indicating waning interest from investors. Despite this, liquidity remains adequate, with the stock able to support trades worth approximately ₹0.26 crore based on 2% of the five-day average traded value.
Fundamental Analysis: Mixed Signals
From a fundamental perspective, Cosmo First presents a mixed picture. The company maintains a relatively low average debt-to-equity ratio of 0.50 times, which is generally favourable. Its return on capital employed (ROCE) stands at 7.4%, and the enterprise value to capital employed ratio is 1.1, suggesting the stock is attractively valued compared to peers. Notably, profits have increased by 41.4% over the past year, and the price/earnings to growth (PEG) ratio is a low 0.3, indicating potential undervaluation relative to earnings growth.
However, these positives are overshadowed by poor long-term growth metrics. Operating profit has declined at an annual rate of 3.69% over the last five years, signalling structural challenges in profitability. The company’s latest half-year results reveal concerning trends, including the lowest operating cash flow in recent years at ₹166.37 crore, a peak debt-to-equity ratio of 1.11 times, and the highest quarterly interest expense of ₹36.67 crore. These factors suggest rising financial strain and limited operational efficiency.
Investor confidence appears muted, as evidenced by the negligible 0.02% stake held by domestic mutual funds. Given their capacity for thorough research, this minimal exposure may reflect reservations about the company’s valuation or business prospects.
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Conclusion: Why Cosmo First Is Falling
The decline in Cosmo First’s share price on 16 December and over recent weeks can be attributed to a combination of weak financial performance, deteriorating operational metrics, and subdued investor interest. Despite some attractive valuation metrics and profit growth, the company’s poor long-term operating profit trend, rising debt levels, and high interest costs have raised concerns. The stock’s consistent underperformance relative to the Sensex and sector peers further dampens sentiment.
Technical indicators reinforce the bearish outlook, with the stock trading below all major moving averages and experiencing falling delivery volumes. The lack of significant institutional backing, particularly from domestic mutual funds, adds to the cautious stance among investors. Collectively, these factors explain the ongoing downward pressure on Cosmo First’s stock price, signalling that investors remain wary amid uncertain growth prospects and financial challenges.
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