Why is GMDC falling/rising?

Strong Price Performance Against Benchmarks

GMDC’s recent price action stands out when compared to broader market indices. Over the past week, the stock gained 1.19%, outperforming the Sensex which declined by 0.52%. Although the stock experienced a 12.44% decline over the last month, its year-to-date (YTD) return of 61.53% significantly surpasses the Sensex’s 9.12% gain. Over the last year, GMDC has delivered an impressive 43.95% return, dwarfing the Sensex’s 4.89% increase. Even over longer horizons, the stock’s three-year and five-year returns of 237.96% and 912.56% respectively, highlight its exceptional growth trajectory relative to the benchmark’s 37.24% and 84.97% gains.

Recent Trading Activity and Technical Indicators

On 12-Dec, GMDC outperformed its sector by 3.77%, continuing a positive momentum with gains over two consecutive days amounting to 6.79%. The stock reached an intraday high of ₹529.90, marking a 7.23% increase from previous levels. Technically, the share price remains above its 5-day, 100-day, and 200-day moving averages, signalling underlying strength, although it trades below the 20-day and 50-day averages, indicating some short-term resistance. Despite this, liquidity remains adequate with a trade size capacity of ₹3.13 crore based on recent volumes, though delivery volumes have declined by 16.53% compared to the five-day average, suggesting slightly reduced investor participation.

Fundamental Strengths Supporting the Rally

GMDC’s low debt-to-equity ratio, effectively zero, provides a solid financial foundation, reducing risk associated with leverage. The company’s operating profit has grown at an annualised rate of 60.63%, underscoring healthy long-term earnings expansion. Institutional investors have taken note, increasing their stake by 1.04% in the previous quarter to hold 4.08% collectively. This growing institutional interest often signals confidence in the company’s fundamentals, as these investors typically conduct thorough analysis before committing capital.

Market-Beating Returns Despite Recent Operational Setbacks

While GMDC’s stock price has surged, the company reported some negative quarterly results in September 2025. Net sales for the quarter stood at ₹527.58 crore, down 23.7% compared to the previous four-quarter average. Profit after tax (PAT) also declined by 31.1% to ₹114.64 crore. Additionally, the half-year return on capital employed (ROCE) was relatively low at 12.08%, and the return on equity (ROE) was 9.7%. These figures suggest operational challenges that have yet to fully impact investor sentiment.

Despite these setbacks, the stock’s valuation remains elevated, trading at a price-to-book ratio of 2.5, which is high relative to peers. The company’s price-to-earnings-growth (PEG) ratio of 4.3 indicates that the market is pricing in substantial future growth, even though profit growth over the past year was a modest 5.9%. This premium valuation reflects investor optimism about GMDC’s long-term prospects, supported by its strong historical returns and institutional backing.

Conclusion: Why GMDC Is Rising Despite Challenges

GMDC’s share price rise on 12-Dec is primarily driven by its strong long-term growth record, significant outperformance relative to market benchmarks, and increasing institutional investor confidence. The company’s low leverage and robust operating profit growth underpin this positive sentiment. Although recent quarterly results have shown declines in sales and profits, the market appears to be looking beyond short-term setbacks, valuing the stock for its potential and historical performance. The premium valuation suggests investors are willing to pay a higher price for anticipated future growth, supported by the stock’s consistent gains and technical strength.

Investors should, however, remain mindful of the operational headwinds and valuation risks as they consider GMDC’s place in their portfolios.

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 →