Why is F A C T falling/rising?

Recent Price Movement and Market Comparison

F A C T’s stock has underperformed both its sector and the broader market in the short term. Over the past week, the stock has declined by 4.88%, significantly lagging the Sensex’s marginal drop of 0.06%. The one-month performance also shows a negative return of 2.72%, contrasting with the Sensex’s gain of 0.82%. Year-to-date, the stock is down 12.07%, while the benchmark index has risen by 8.65%. These figures highlight a persistent weakness in the stock relative to the broader market and its sector peers.

On the day in question, F A C T’s share price touched an intraday low of ₹860, marking a 2.68% drop. The stock has now fallen for two consecutive days, losing 4.35% in that period. Notably, it is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish technical outlook. Investor participation has also waned, with delivery volumes on 21 Nov falling by over 20% compared to the five-day average, indicating reduced buying interest.

Financial Performance and Debt Concerns

Despite being the second largest company in its sector with a market capitalisation of ₹57,201 crores and accounting for over a quarter of the sector’s market weight, F A C T’s financial health raises concerns. The company’s ability to service its debt is notably weak, with an average EBIT to interest coverage ratio of just 1.79. This low ratio suggests limited cushion to meet interest obligations, increasing financial risk.

Long-term growth has been disappointing, with operating profit shrinking at an annualised rate of 17.44% over the past five years. The latest quarterly results for September 2025 were flat, with profit before tax excluding other income falling by 11.4% to a loss of ₹30.10 crores compared to the previous four-quarter average. The company’s debt-equity ratio remains high at 2.79 times, indicating significant leverage. Meanwhile, cash and cash equivalents have dropped to ₹2,222.42 crores, the lowest level recorded in the half-year period, further constraining financial flexibility.

Valuation and Investor Sentiment

F A C T’s valuation metrics also contribute to the stock’s decline. The company’s return on capital employed (ROCE) stands at a modest 4.7%, yet it trades at a steep premium with an enterprise value to capital employed ratio of 19.2. This expensive valuation is not supported by earnings growth, as profits have fallen by 14.3% over the past year despite the stock generating a modest 4.40% return in the same period. Such disparity between valuation and earnings performance may deter value-conscious investors.

Investor confidence appears subdued, as reflected by the minimal stake held by domestic mutual funds, which own only 0.39% of the company. Given their capacity for detailed research and due diligence, this low holding could indicate a lack of conviction in the company’s prospects or valuation at current levels.

Conclusion: Why F A C T Is Falling

The recent decline in F A C T’s share price is primarily driven by weak financial fundamentals, including poor debt servicing ability, declining operating profits, and high leverage. The company’s flat recent results and shrinking cash reserves add to concerns about its operational health. Furthermore, the stock’s expensive valuation relative to its modest returns and falling profits undermines investor appetite. Reduced trading volumes and low institutional ownership further reflect cautious sentiment among market participants. Collectively, these factors have contributed to the stock’s underperformance against the Sensex and its sector peers, resulting in the current downward pressure on its price.

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 →