Why is EKI Energy falling/rising?

Recent Price Movement and Market Context

EKI Energy’s stock has been under pressure for the past five consecutive trading sessions, registering a cumulative decline of 5.45% over the week. This contrasts sharply with the broader Sensex index, which has remained relatively stable, declining only 0.40% in the same period. The stock’s intraday price action on 18-Dec showed volatility, with a high of ₹99.70, up 3.21%, but it ultimately settled near its low of ₹94.55, down 2.12%. The weighted average price indicates that a larger volume of shares traded closer to the lower end of the day’s range, signalling selling pressure.

Further technical indicators reinforce the bearish sentiment. EKI Energy is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, suggesting a sustained downtrend. Despite a notable 45.28% increase in delivery volume on 17-Dec compared to the five-day average, this heightened investor participation has not translated into price support, indicating that selling interest may be outweighing buying demand.

Fundamental Weaknesses Driving the Decline

The primary reason behind EKI Energy’s sustained share price decline lies in its deteriorating fundamental performance. Over the last five years, the company’s net sales have contracted at an alarming annual rate of 53.97%, signalling severe challenges in revenue generation. This decline in top-line growth is compounded by a persistently weak return on equity (ROE) averaging 0%, indicating that the company has struggled to generate profits from shareholders’ investments.

Financial health is further undermined by the company’s inability to service its debt effectively. The average EBIT to interest ratio stands at a negative 29.19, reflecting operational earnings insufficient to cover interest expenses. This weak coverage ratio raises concerns about the company’s solvency and financial stability.

EKI Energy has reported negative results for three consecutive quarters, including the most recent quarter ending in March 2025. Quarterly net sales have fallen sharply by 42.3% compared to the previous four-quarter average, reaching ₹35.06 crores. Meanwhile, the company posted a net loss of ₹2.16 crores for the quarter, a staggering 1364.4% decline relative to the prior four-quarter average. Operating cash flow for the year is also at a low ₹42.62 crores, underscoring cash generation difficulties.

Market Performance and Valuation Concerns

From a market perspective, EKI Energy’s stock has been a significant underperformer. Year-to-date, the stock has plummeted 63.02%, while the Sensex has gained 8.12%. Over the past year, the stock’s return has been negative 67.45%, in stark contrast to the Sensex’s 5.36% rise. This underperformance extends over three years, with the stock losing 93.16% compared to the Sensex’s 37.73% gain. The absence of five-year data further highlights the company’s limited track record of sustained growth.

Despite the poor share price performance, the company’s profits have reportedly risen by 85% over the past year, a discrepancy that may reflect accounting nuances or non-operational factors rather than a turnaround in core business fundamentals. The stock is considered risky relative to its historical valuations, trading with negative EBITDA and lacking investor confidence.

Conclusion: Why EKI Energy Is Falling

In summary, EKI Energy’s share price decline as of 18-Dec is primarily driven by its weak long-term fundamentals, including shrinking sales, poor profitability, and inadequate debt servicing capacity. The company’s consistent negative quarterly results and operating cash flow challenges have eroded investor confidence, reflected in the stock’s persistent underperformance against the benchmark indices. Technical indicators confirm the bearish trend, with the stock trading below all major moving averages and experiencing selling pressure despite increased trading volumes.

Given these factors, the stock remains a strong sell candidate for investors seeking stable growth and financial resilience. Market participants are advised to consider alternative investment opportunities with stronger fundamentals and more favourable valuation profiles.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →