Why is Kabsons Industri falling/rising?

Dec 02 2025 12:27 AM IST

Share Via

On 01-Dec, Kabsons Industries Ltd witnessed a notable decline in its share price, falling by 4.94% to close at ₹16.16. This drop reflects a continuation of the stock’s underperformance relative to market benchmarks and is underpinned by a combination of weak financial results, deteriorating fundamentals, and waning promoter confidence.

Persistent Underperformance Against Benchmarks

Kabsons Industries has been struggling to keep pace with broader market indices. Over the past week, the stock declined by 3.52%, while the Sensex gained 0.87%. The divergence is even more pronounced over longer periods: the stock has fallen 15.96% in the last month compared to a 2.03% rise in the Sensex. Year-to-date, Kabsons Industries is down 47.02%, starkly contrasting with the Sensex’s 9.60% gain. Over the last year, the stock’s return plummeted by 56.35%, whereas the Sensex rose by 7.32%. Even over three years, the company’s 32.24% gain trails the Sensex’s 35.33% appreciation. This consistent underperformance highlights the challenges Kabsons faces in delivering shareholder value.

Technical Indicators Signal Weak Momentum

The stock is trading close to its 52-week low, just 4.46% above the lowest price of ₹15.44. It is currently below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating sustained downward momentum. Despite a 21.01% increase in delivery volume on 28 Nov compared to the five-day average, the stock underperformed its sector by 4.11% on the day, suggesting that increased trading activity has not translated into positive price movement.

Weak Financial Performance and Profitability Concerns

Kabsons Industries’ financial health remains fragile. The company has experienced a negative compound annual growth rate (CAGR) of -4.85% in operating profits over the past five years, signalling deteriorating earnings capacity. The latest quarterly results for September 2025 were particularly disappointing, with the Profit Before Depreciation, Interest, and Taxes (PBDIT) at a low ₹0.19 crore and operating profit to net sales ratio at a mere 1.79%. Additionally, the Profit Before Tax excluding other income was negative at ₹-0.12 crore, underscoring operational challenges.

The company’s ability to service its debt is weak, as reflected by an average EBIT to interest ratio of 0.62, well below the threshold for comfortable debt servicing. Return on Capital Employed (ROCE) stands at a modest 6.88%, indicating low efficiency in generating profits from its capital base. Meanwhile, the Return on Equity (ROE) is only 5.3%, which, combined with a high Price to Book Value ratio of 1.9, suggests the stock is trading at a premium despite its poor profitability metrics.

Promoter Stake Reduction Dampens Confidence

Investor sentiment has been further impacted by a reduction in promoter holdings. Over the previous quarter, promoters decreased their stake by 4.86%, now holding 63.13% of the company. Such a decline in promoter confidence often signals concerns about the company’s future prospects and can weigh heavily on the stock price.

The stock’s valuation appears stretched relative to its peers, especially given the significant profit decline of 65.8% over the past year. This disconnect between valuation and earnings performance has likely contributed to the sustained selling pressure.

Long-Term Underperformance and Market Position

Despite a remarkable five-year return of 397.23%, which outpaces the Sensex’s 91.78% gain over the same period, Kabsons Industries’ recent performance has been disappointing. The stock has underperformed the BSE500 index over the last three years, one year, and three months, reflecting a loss of momentum and investor confidence. This underperformance, coupled with weak fundamentals and reduced promoter backing, explains the current downward pressure on the stock price.

In summary, Kabsons Industries’ share price decline on 01-Dec is primarily attributable to its weak financial results, poor profitability ratios, high valuation relative to earnings, and diminishing promoter confidence. These factors have combined to erode investor trust, resulting in the stock trading near its 52-week lows and underperforming both its sector and broader market indices.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →

{{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