Why is Hardcastle & Waud Mfg Co Ltd falling/rising?

Recent Price Movement and Market Comparison

Hardcastle & Waud’s stock has been on a downward trajectory over the past week, losing 6.18% compared to the Sensex’s modest decline of 1.86%. Year-to-date, the stock has fallen 10.07%, substantially underperforming the Sensex’s 2.16% drop. Over the last year, the stock’s return has been negative 23.03%, while the Sensex has gained 9.00%. Even over a three-year horizon, the stock’s 33.80% gain lags behind the Sensex’s 38.37% rise. Despite a strong five-year return of 257.46%, this recent underperformance signals growing investor concerns.

On the trading day of 14-Jan, the stock reached an intraday low of ₹659.15, marking a 4.99% decline. The weighted average price indicates that a larger volume of shares traded near this low, suggesting selling pressure. Additionally, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, which typically signals bearish momentum. Notably, investor participation has increased, with delivery volume on 13-Jan rising by 18.64% compared to the five-day average, indicating heightened activity amid the decline.

Fundamental Analysis and Valuation

From a fundamental perspective, Hardcastle & Waud presents a mixed picture. The company’s return on equity (ROE) stands at 4.6%, which is modest and suggests limited profitability relative to shareholder equity. The price-to-book value ratio of 0.9 indicates the stock is trading at a fair valuation compared to its peers’ historical averages. Despite the stock’s negative return over the past year, the company’s profits have increased by 13.6%, and the PEG ratio of 1.5 suggests that the stock’s price is somewhat aligned with its earnings growth potential.

However, the long-term fundamentals raise concerns. The average ROE over the past five years is a weak 3.63%, reflecting limited efficiency in generating returns. Operating profit growth has averaged 15.61% annually over the same period, which, while positive, may not be sufficient to drive significant shareholder value. The company’s ability to service its debt is also questionable, with an average EBIT to interest coverage ratio of just 1.88, indicating vulnerability to financial stress.

Moreover, the company reported flat results in September 2025, with cash and cash equivalents at a low ₹0.25 crore, signalling tight liquidity. This financial position may be contributing to investor caution and the stock’s recent decline.

Performance Relative to Broader Market and Sector

Hardcastle & Waud’s underperformance is not limited to short-term fluctuations. The stock has lagged behind the BSE500 index over the last three years, one year, and three months, highlighting persistent challenges in delivering competitive returns. Its recent three-day consecutive fall, with a cumulative loss of 7.78%, further emphasises the bearish sentiment among investors. The stock’s performance today also underperformed its sector by 3.38%, indicating sector peers may be faring better amid current market conditions.

Conclusion: Why the Stock is Falling

In summary, Hardcastle & Waud Mfg Co Ltd’s stock is falling due to a combination of weak long-term fundamentals, underwhelming financial metrics, and recent negative price momentum. Despite some profit growth, the company’s modest ROE, limited debt servicing capacity, and low cash reserves have likely eroded investor confidence. The stock’s consistent underperformance relative to the Sensex and BSE500, coupled with its trading below all major moving averages and increased selling volume, reinforces the bearish outlook. Investors appear to be reacting to these factors, resulting in the stock’s notable decline as of 14-Jan.

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