Why is Crestchem Ltd falling/rising?

Recent Price Movement and Market Comparison

The stock has been under pressure recently, registering a decline of 2.85% over the past week and a more pronounced drop of 10.12% in the last month. Year-to-date, Crestchem’s shares have fallen by 2.85%, underperforming the Sensex, which gained 0.30% over the same period. The most striking contrast is seen over the last year, where Crestchem’s stock plummeted by 60.98%, while the Sensex rose by 8.65%. This stark divergence highlights the stock’s struggles amid a generally positive market environment.

On 07-Jan, Crestchem hit a new 52-week low of ₹108, signalling persistent selling pressure. The stock opened with a gap down of 2.64% and touched an intraday low representing a 4.85% decline from the previous close. Notably, the weighted average price indicates that more volume was traded near the day’s low, suggesting that sellers dominated the session. Furthermore, the stock is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – reinforcing the bearish technical outlook.

Investor participation has also waned, with delivery volumes on 06-Jan falling by 17.51% compared to the five-day average, indicating reduced buying interest. Despite this, liquidity remains adequate for trading, although the lack of strong demand is evident in the price action.

Fundamental Challenges Weighing on Crestchem

Despite a return on equity (ROE) of 25%, which suggests some operational efficiency, Crestchem’s valuation at a price-to-book ratio of 4.1 is considered fair relative to its peers’ historical averages. However, the company’s profitability has deteriorated significantly, with profits falling by 36.3% over the past year. This decline in earnings is a critical factor behind the stock’s poor performance.

The company’s long-term fundamentals also raise concerns. Operating profits have grown at a compound annual growth rate (CAGR) of just 19.73% over the last five years, which is modest given the sector’s growth potential. More importantly, Crestchem’s ability to service its debt is weak, as reflected by an average EBIT to interest coverage ratio of only 1.75. This low ratio indicates limited cushion to meet interest obligations, increasing financial risk.

Additionally, the company reported flat results in the half-year ended September 2025, with a return on capital employed (ROCE) at a low 32.96%. This stagnation in profitability metrics further dampens investor confidence.

The stock’s underperformance relative to the broader market is stark. While the BSE500 index generated a 7.21% return over the last year, Crestchem’s shares declined by nearly 61%, signalling that investors have been penalising the stock for its weak earnings and financial metrics.

Investor Sentiment and Shareholding Pattern

The majority of Crestchem’s shares are held by non-institutional investors, which may contribute to higher volatility and less stable demand. The recent decline in delivery volumes suggests that institutional participation has not increased to support the stock price. This lack of strong institutional backing, combined with weak financial performance, has likely contributed to the ongoing downward pressure on the share price.

In summary, Crestchem Ltd’s share price decline on 07-Jan and over the past year can be attributed to a combination of deteriorating profitability, weak debt servicing capacity, flat recent results, and significant underperformance relative to market benchmarks. The technical indicators and reduced investor participation further compound the negative sentiment, making the stock less attractive in the current environment.

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