Why is Dharan Infra-EPC falling/rising?

Steep Decline Against Market Benchmarks

Dharan Infra-EPC’s share price has been under significant pressure over multiple time frames. In the past week alone, the stock has declined by 17.14%, starkly contrasting with the Sensex’s modest gain of 0.20%. Over the last month, the stock’s fall deepened to 44.23%, while the benchmark index remained nearly flat with a slight dip of 0.46%. Year-to-date, the stock has plummeted 66.47%, whereas the Sensex has advanced by 8.22%. The one-year and three-year returns further highlight the stock’s underperformance, with losses of 73.87% and 82.99% respectively, compared to the Sensex’s gains of 4.80% and 37.86%. Over five years, the stock has lost more than 90% of its value, while the Sensex has surged over 80%.

Technical Weakness and Investor Sentiment

On 17-Dec, Dharan Infra-EPC’s shares dropped by 9.38%, continuing a two-day losing streak. The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling persistent bearish momentum. Despite this, investor participation has increased, with delivery volumes on 12 Dec rising by 156.29% compared to the five-day average, indicating heightened trading activity amid the decline. Liquidity remains adequate for small trade sizes, but the stock’s sharp fall and new lows have likely dampened confidence among market participants.

Fundamental Weaknesses Weighing on the Stock

Dharan Infra-EPC’s prolonged decline is underpinned by weak long-term fundamentals. The company has reported operating losses, reflecting a fragile financial position. Over the past five years, net sales have contracted at an alarming annual rate of 54.03%, while operating profit has deteriorated even more sharply at an annualised rate of -215.16%. This negative growth trajectory signals severe operational challenges and shrinking business scale.

Moreover, the company’s ability to service its debt is notably poor, with an average EBIT to interest ratio of -6.37, indicating that earnings before interest and tax are insufficient to cover interest expenses. This weak coverage ratio raises concerns about financial sustainability and credit risk, which likely contributes to investor wariness.

Risk Factors and Market Valuation

The stock is considered risky relative to its historical valuations, trading at levels that suggest heightened uncertainty. Despite the stock’s steep decline of 73.87% over the past year, the company’s profits have paradoxically increased by 39.8%, a divergence that may reflect accounting nuances or one-off factors rather than a sustainable turnaround. This inconsistency adds to the cautious sentiment among investors.

Shareholder Composition and Market Outlook

The majority of Dharan Infra-EPC’s shares are held by non-institutional investors, which may limit the stock’s stability and reduce the influence of large, strategic shareholders who might otherwise provide support during turbulent periods. The company’s negative EBITDA and operating losses further reinforce the view that the stock remains a strong sell for investors prioritising financial health and growth prospects.

In summary, Dharan Infra-EPC’s share price decline to ₹0.29 on 17-Dec is a reflection of its deteriorating financial fundamentals, poor operational performance, and weak debt servicing capacity. The stock’s consistent underperformance relative to the Sensex and sector peers, combined with technical weakness and investor caution, suggests that the downward trend may persist until there is a meaningful improvement in the company’s business outlook.

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 →