Why is Jindal Drilling & Industries Ltd falling/rising?

Recent Price Movement and Market Context

On 20 January, Jindal Drilling’s stock price dropped by ₹7.9, marking a 1.53% decrease from the previous close. This decline forms part of a three-day losing streak, during which the stock has fallen by 3.38%. Intraday trading saw the price touch a low of ₹500.10, down 3.06% from the prior session’s close. Notably, the weighted average price indicates that a greater volume of shares exchanged hands closer to the day’s low, suggesting selling pressure.

The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish technical outlook. Furthermore, investor participation appears to be waning, with delivery volumes on 19 January falling by over 31% compared to the five-day average. Despite this, liquidity remains sufficient for moderate trade sizes, with the stock able to handle transactions worth approximately ₹0.12 crore based on recent average traded value.

Performance Relative to Benchmarks

Examining the stock’s returns against the Sensex benchmark reveals a mixed picture. Over the past week, Jindal Drilling’s shares have declined by 2.76%, underperforming the Sensex’s 1.73% fall. However, over the last month, the stock posted a modest gain of 0.34%, outperforming the Sensex which declined by 3.24%. Year-to-date, the stock has fallen 11.47%, a sharper drop than the Sensex’s 3.57% decline. The one-year performance is notably weak, with the stock down 34.87%, contrasting with the Sensex’s 6.63% gain. Conversely, the company’s longer-term returns remain robust, with a 3-year gain of 77.10% and an impressive 5-year return of 490.01%, significantly outpacing the Sensex’s respective 35.56% and 65.05% gains.

Fundamental Strengths Amid Price Weakness

Despite the recent price softness, Jindal Drilling & Industries Ltd boasts strong fundamental credentials. The company maintains a low average debt-to-equity ratio of 0.07 times, indicating a conservative capital structure that reduces financial risk. Operating profit has grown at an annualised rate of 55.05%, reflecting healthy operational efficiency and expansion.

In its latest financial results declared in September 2025, the company reported a net profit growth of 113.89%, continuing a streak of six consecutive quarters of positive earnings. The profit after tax (PAT) for the latest six months stood at ₹198.63 crore, up 153.58%, while net sales rose 43.27% to ₹492.12 crore. The operating profit to interest coverage ratio reached a high of 43.87 times, underscoring the company’s strong ability to service debt.

Return on equity (ROE) is a healthy 18.7%, and the stock trades at a price-to-book value of 0.8, suggesting it is undervalued relative to its peers. Notably, while the stock’s one-year return has been negative, profits have surged by 252.9% over the same period, resulting in a PEG ratio of zero, which may indicate undervaluation based on earnings growth.

Conclusion: Price Decline Reflects Short-Term Market Sentiment

The recent decline in Jindal Drilling’s share price appears to be driven primarily by short-term market dynamics rather than fundamental weaknesses. The stock’s proximity to its 52-week low, combined with falling investor participation and trading below all major moving averages, suggests cautious sentiment among traders. However, the company’s strong financial performance, low leverage, and attractive valuation metrics provide a solid foundation for long-term investors.

Investors should weigh the current technical weakness against the company’s robust earnings growth and conservative balance sheet. While the stock has underperformed the broader market over the past year, its substantial profit growth and discounted valuation may offer potential opportunities for those with a longer investment horizon.

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