Why is Kajaria Ceramics Ltd. falling/rising?

Recent Price Movement and Market Comparison

Kajaria Ceramics has been under pressure over the past week, registering a decline of 6.72% compared to a 1.00% rise in the Sensex benchmark. This underperformance extends over longer periods, with the stock down 5.70% in the last month while the Sensex gained 0.34%. Year-to-date, the stock has fallen 12.38%, contrasting sharply with the Sensex’s 9.45% appreciation. Over one year, the stock’s return stands at -10.48%, whereas the Sensex has advanced by 8.89%. Even over three and five years, Kajaria’s gains of 44.54% lag behind the Sensex’s robust 42.91% and 84.15% respectively. These figures highlight a persistent relative weakness in the stock’s performance despite a generally bullish market environment.

Intraday Trading Dynamics on 23-Dec

On the day in question, the stock opened with a positive gap of 2%, reaching an intraday high of ₹1,068.45, also a 2% gain. However, the momentum reversed sharply, with the price falling to an intraday low of ₹1,011.90, a 3.4% decline from the previous close. The weighted average price indicates that a larger volume of shares traded closer to the day’s low, signalling selling pressure. This intraday volatility culminated in the stock closing down 3.01%, underperforming its sector by 1.6%. Notably, Kajaria Ceramics has been declining for six consecutive trading sessions, losing 7.36% in that period, underscoring sustained bearish sentiment.

Technical Indicators and Investor Participation

Technically, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating a bearish trend across short, medium, and long-term horizons. Despite this, investor participation has increased significantly, with delivery volumes on 22 Dec rising by 258.54% to 5.27 lakh shares compared to the five-day average. This surge in volume suggests heightened interest, possibly from institutional investors or traders seeking to capitalise on price movements. The stock’s liquidity remains adequate, supporting trades of approximately ₹0.57 crore based on 2% of the five-day average traded value.

Fundamental Strengths Amidst Price Weakness

Despite the recent price decline, Kajaria Ceramics exhibits several fundamental strengths. The company boasts a high return on equity (ROE) of 16.14%, reflecting efficient management and profitability. Its debt-to-equity ratio remains at zero, indicating a conservative capital structure with minimal financial leverage. The latest quarterly results for September 2025 reveal record profitability metrics, including a profit before tax less other income of ₹166.84 crore and a PBDIT of ₹213.45 crore. Operating profit as a percentage of net sales reached a peak of 18.00%, underscoring operational efficiency.

Valuation metrics also suggest the stock is trading at a reasonable level. With an ROE of 13.3 and a price-to-book value of 5.5, Kajaria Ceramics is fairly valued relative to its historical peer averages. Although the stock’s one-year return is negative at -10.48%, profits have marginally increased by 0.8% over the same period. The company’s PEG ratio stands at 41.5, indicating a high price relative to earnings growth, which may temper investor enthusiasm.

Market Position and Institutional Confidence

Kajaria Ceramics commands a significant presence in its sector, with a market capitalisation of ₹16,684 crore, making it the largest company in the industry and representing 30.00% of the sector’s market value. Its annual sales of ₹4,666.22 crore account for nearly 20% of the industry’s total. Institutional investors hold a substantial 37.57% stake in the company, reflecting confidence from entities with greater analytical resources and long-term perspectives. This institutional backing may provide some support to the stock amid short-term volatility.

Conclusion: Why the Stock is Falling

The decline in Kajaria Ceramics’ share price on 23-Dec and over recent weeks can be attributed primarily to its sustained underperformance relative to the broader market and sector peers. Despite opening the day with gains, selling pressure intensified, pushing the price down to close near the day’s lows. The stock’s position below all major moving averages signals a bearish technical outlook, which may discourage short-term traders. While fundamental indicators remain robust, including strong profitability and low leverage, the relatively high valuation multiples and modest profit growth have likely constrained investor appetite. Additionally, the stock’s negative returns over multiple timeframes contrast with the Sensex’s positive trajectory, further dampening sentiment. Elevated trading volumes suggest active repositioning by investors, but the prevailing trend remains downward until clearer catalysts emerge.

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 →