Why is Heads UP Ventures Ltd falling/rising?

4 hours ago

Share Via

As of 12-Jan, Heads UP Ventures Ltd has experienced a notable decline in its share price, falling 1.5% to ₹8.56 by 9:03 PM. This drop continues a recent trend of underperformance against both its sector and broader market benchmarks, reflecting underlying concerns about the company’s long-term fundamentals despite some positive earnings results.

Recent Price Movement and Market Performance

On 12 January, Heads UP Ventures Ltd closed at ₹8.56, down by ₹0.13 or 1.5% from the previous session. This decline is part of a broader negative trend, with the stock having fallen by 3.82% over the past week and 7.06% in the last month. Year-to-date, the stock has lost 5.31%, significantly underperforming the Sensex, which has gained 1.58% in the same period. Over the last year, the stock’s return stands at a steep -23.02%, contrasting sharply with the Sensex’s positive 8.40% gain.

The stock has also been on a three-day losing streak, shedding 6.55% in that period alone. It is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum. Investor participation appears to be waning, with delivery volumes on 9 January dropping by 27.52% compared to the five-day average, indicating reduced buying interest.

Financial Performance: Positive Earnings Amidst Structural Challenges

Despite the stock’s poor price performance, Heads UP Ventures Ltd has reported encouraging earnings growth. The company has declared positive results for three consecutive quarters, with its profit after tax (PAT) for the latest six months rising to ₹3.69 crores. This represents a remarkable 291.3% increase in profits over the past year, a figure that stands out given the stock’s negative return during the same period.

The company’s return on equity (ROE) is reported at 26.5%, which is considered very attractive and suggests efficient utilisation of shareholders’ funds in the most recent period. Additionally, the stock trades at a price-to-book value of 1, indicating it is valued at book value and is trading at a discount relative to its peers’ historical valuations. The PEG ratio of zero further highlights the disconnect between earnings growth and stock price appreciation.

Long-Term Weaknesses and Market Underperformance

However, these positive earnings figures are overshadowed by significant long-term concerns. Over the past five years, the company’s net sales have declined at a compound annual growth rate (CAGR) of -25.81%, signalling shrinking top-line revenue. This contraction raises questions about the sustainability of recent profit gains.

Moreover, the company’s ability to service its debt is weak, with an average EBIT to interest ratio of -4.28, indicating that earnings before interest and tax are insufficient to cover interest expenses. This financial strain is compounded by a low average ROE of 5.30% over the longer term, reflecting limited profitability per unit of shareholder equity.

Consistent underperformance against benchmarks further dampens investor sentiment. The stock has lagged behind the BSE500 index in each of the last three annual periods and has generated negative returns over three and five years, while the Sensex has delivered robust gains of 39.89% and 69.39% respectively over the same durations.

Investor Composition and Liquidity

The majority of shareholders in Heads UP Ventures Ltd are non-institutional investors, which may contribute to higher volatility and less stable demand for the stock. Liquidity remains adequate for trading, with the stock’s traded value supporting reasonable trade sizes, although recent declines in delivery volumes suggest cautious investor behaviour.

Conclusion: A Stock Under Pressure Despite Earnings Growth

In summary, Heads UP Ventures Ltd’s share price decline as of 12 January reflects a complex interplay of factors. While the company has demonstrated impressive profit growth and attractive recent ROE, these positives are offset by weak long-term sales trends, poor debt servicing capacity, and persistent underperformance relative to market benchmarks. The stock’s position below all major moving averages and falling investor participation further underline the bearish sentiment prevailing among market participants.

Investors should weigh the company’s recent earnings improvements against its structural challenges and historical underperformance before considering exposure to this stock.

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 →

{{stockdata.stock.stock_name.value}} Live

{{stockdata.stock.price.value}} {{stockdata.stock.price_difference.value}} ({{stockdata.stock.price_percentage.value}}%)

{{stockdata.stock.date.value}} | BSE+NSE Vol: {{stockdata.index_name}} Vol: {{stockdata.stock.bse_nse_vol.value}} ({{stockdata.stock.bse_nse_vol_per.value}}%)

MOJO SCORE