Why is Gokaldas Exports Ltd falling/rising?

Recent Price Movement and Market Performance

On 06-Feb, Gokaldas Exports Ltd's stock price fell sharply, touching an intraday low of ₹769.75, representing a 5.27% decline within the trading session. The stock has been on a downward trajectory for two consecutive days, losing 6.52% over this period. Despite trading above its 5-day, 20-day, 50-day, and 100-day moving averages, the share price remains below its 200-day moving average, signalling potential longer-term resistance. Additionally, the weighted average price indicates that a greater volume of shares was traded closer to the day's low, suggesting selling pressure.

Investor participation has also waned, with delivery volumes on 05 Feb falling by 12.41% compared to the five-day average, indicating reduced buying interest. However, liquidity remains adequate, with the stock capable of supporting trades worth approximately ₹8.27 crores based on 2% of the five-day average traded value.

Fundamental Challenges Weighing on the Stock

Despite some positive long-term indicators, such as a robust net sales growth rate of 26.90% annually and an operating profit increase of 41.19%, the company’s recent financial performance has raised concerns. The December 2025 quarterly results revealed a steep decline in profitability, with Profit Before Tax (PBT) excluding other income plummeting by 87.79% to ₹6.63 crores. Net profit after tax (PAT) also fell sharply by 71.0% to ₹14.61 crores. Notably, non-operating income accounted for 74.64% of the PBT, highlighting a reliance on income sources outside core operations.

These disappointing earnings have contributed to the stock’s underperformance over the past year, where it has generated a negative return of 20.31%, in stark contrast to the Sensex’s positive 7.07% gain. Profit declines of 22% over the same period further underscore the challenges faced by the company.

Promoter Share Pledging Adds Downward Pressure

A significant factor contributing to the stock’s recent decline is the extremely high level of promoter share pledging. As of the latest data, 96.28% of promoter shares are pledged. In volatile or falling markets, such high pledging often results in forced selling or margin calls, which can exacerbate downward price movements. This dynamic places additional pressure on the stock, especially when combined with weak earnings and reduced investor confidence.

While the company maintains a strong ability to service its debt, with a low Debt to EBITDA ratio of 1.09 times, and a reasonable Return on Capital Employed (ROCE) of 8.6, these positives have not been sufficient to offset the negative sentiment. The stock currently trades at a premium relative to its peers’ historical valuations, which may also be a factor in investor caution given the recent profit declines.

Long-Term Perspective and Investor Considerations

Over a longer horizon, Gokaldas Exports Ltd has delivered impressive returns, with a five-year gain of 871.21%, significantly outperforming the Sensex’s 64.75% rise. The three-year return of 122.97% also highlights the company’s growth potential. However, the recent one-year underperformance and quarterly profit setbacks suggest caution for investors seeking near-term stability.

Given the current market conditions, the combination of weak quarterly earnings, high promoter pledging, and recent price underperformance relative to sector and benchmark indices explains the stock’s decline on 06-Feb. Investors should weigh these factors carefully against the company’s long-term growth prospects and financial health before making investment decisions.

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 →