Why is Intense Technologies Ltd falling/rising?

Recent Price Movement and Market Context

Intense Technologies Ltd’s stock price has shown a slight rebound in the short term, gaining 3.15 points or 3.06% as of the evening trading session on 23 January. This rise follows two consecutive days of gains, cumulatively delivering a 6.38% return over this brief period. The stock also touched an intraday high of ₹113, representing a near 10% surge within the day, indicating some renewed buying interest. However, this uptick contrasts with the broader trend over recent weeks and months, where the stock has underperformed significantly against the benchmark Sensex and its sector peers.

Over the past week, the stock declined by 7.47%, considerably worse than the Sensex’s 2.43% fall. The one-month and year-to-date returns also reflect this weakness, with losses of 10.55% and 7.14% respectively, both exceeding the benchmark’s declines. Most notably, over the last year, Intense Technologies has delivered a negative return of 7.87%, while the Sensex has appreciated by 6.56%. This underperformance highlights persistent investor scepticism about the company’s near-term prospects.

Technical and Trading Dynamics

From a technical standpoint, the stock is trading above its 200-day moving average, which often signals long-term support. However, it remains below its shorter-term moving averages (5, 20, 50, and 100 days), suggesting recent momentum has been weak. The trading range on 23 January was wide, spanning ₹10.5, reflecting volatility and uncertainty among investors. Despite the price rise, the weighted average price indicates that more volume was traded closer to the lower end of the day’s range, hinting at some selling pressure.

Investor participation appears to be waning, with delivery volumes on 22 January falling by nearly 12% compared to the five-day average. This decline in active buying interest may limit the sustainability of the recent price gains. Liquidity remains adequate for modest trade sizes, but the stock’s trading activity does not yet suggest a strong turnaround in investor sentiment.

Fundamental Challenges Weighing on the Stock

Despite the recent price improvement, Intense Technologies faces significant fundamental headwinds. The company’s operating profit has contracted at an annualised rate of 19.81% over the past five years, signalling deteriorating core business performance. Furthermore, the firm has reported negative results for three consecutive quarters, with its profit after tax (PAT) declining by 32.22% over the latest six-month period to ₹5.49 crores. Return on capital employed (ROCE) is notably low at 8.46%, and return on equity (ROE) stands at a modest 7.1%, underscoring limited profitability and capital efficiency.

Valuation metrics also raise concerns. The stock trades at a price-to-book value of 1.7, which is considered expensive relative to its peers and historical averages, especially given the company’s subdued earnings growth and profitability. Over the past year, while the stock price has fallen by nearly 8%, the company’s profits have plunged by 43%, highlighting a disconnect between valuation and financial performance.

Adding to investor unease is the notable reduction in promoter shareholding. Promoters have trimmed their stake by 7.52% in the previous quarter, now holding just 13.07% of the company. Such a decrease often signals diminished confidence from insiders regarding the company’s future prospects, potentially influencing market sentiment negatively.

Conclusion: Temporary Relief Amid Structural Concerns

The recent rise in Intense Technologies Ltd’s share price on 23 January appears to be a short-term rebound rather than a sustained recovery. While the stock outperformed its sector by 3.21% on the day and has gained over 6% in two days, the broader context reveals persistent operational weaknesses, poor profitability trends, and declining promoter confidence. The company’s long-term growth trajectory remains negative, and its valuation premium is difficult to justify given the financial results.

Investors should approach the stock with caution, recognising that the current price increase may be driven by technical factors or transient market sentiment rather than fundamental improvements. The stock’s underperformance relative to the market and peers over the past year further emphasises the challenges ahead for Intense Technologies.

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 →