Recent Price Movement and Market Comparison
The stock has been on a downward trajectory for the past three consecutive days, cumulatively losing 5.89% in value. This decline is sharper than the sector’s average performance, with Kalpataru underperforming its sector by 1.2% on the day. Intraday, the share price touched a low of ₹1,060, marking a 3.89% drop from previous levels. Furthermore, the stock 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.
When compared to the broader market, Kalpataru’s returns have lagged significantly. Over the past week, the stock declined by 5.02%, while the Sensex fell by only 1.77%. This underperformance extends over longer periods as well, with a one-month loss of 6.28% against the Sensex’s 3.56% decline, and a year-to-date drop of 10.10% compared to the Sensex’s 3.89% fall. Over the past year, the stock has generated a negative return of 4.79%, whereas the Sensex has delivered a positive 8.01% gain. Despite this, the stock has outperformed the benchmark over three and five years, with returns of 94.84% and 238.43% respectively, compared to the Sensex’s 35.12% and 65.06%.
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Fundamental Strengths Amid Price Weakness
Despite the recent price weakness, Kalpataru Projects International Ltd has demonstrated robust operational performance. The company has reported positive results for three consecutive quarters, with net sales for the nine-month period reaching ₹19,766.51 crores, reflecting a growth of 27.63%. Quarterly earnings before depreciation, interest, and taxes (PBDIT) hit a record high of ₹561.46 crores, while profit before tax excluding other income (PBT less OI) also reached its highest quarterly level at ₹298.20 crores.
From a valuation perspective, the company remains attractively priced. Its return on capital employed (ROCE) stands at 14.9%, supported by an enterprise value to capital employed ratio of 2.1, indicating a discount relative to its peers’ historical averages. The price-to-earnings-to-growth (PEG) ratio of 0.5 further suggests undervaluation given the company’s profit growth of 56.8% over the past year. Institutional investors hold a significant 56.08% stake in the company, reflecting confidence from well-resourced market participants who typically conduct thorough fundamental analysis.
Kalpataru Projects International Ltd is a major player in its sector, with a market capitalisation of ₹18,665 crores, making it the second largest company in the industry behind PTC Industries. It accounts for 25.22% of the sector’s market cap and generates 41.59% of the industry’s annual sales, which total ₹25,498.99 crores.
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Reasons Behind the Share Price Decline
Despite strong fundamentals and attractive valuation metrics, the stock’s recent decline can be attributed primarily to its underperformance relative to the broader market and sector indices. While the BSE500 index has delivered a 6.30% return over the past year, Kalpataru Projects International Ltd has generated a negative return of 4.79%. This divergence may be causing investor caution, especially given the stock’s sustained trading below key moving averages and recent consecutive daily losses.
Additionally, the rising delivery volume on 20 January, which surged by 120.4% compared to the five-day average, indicates increased investor activity. However, this heightened participation has coincided with falling prices, suggesting that selling pressure may be outweighing buying interest in the short term. The stock’s liquidity remains adequate for trades up to ₹0.29 crores based on 2% of the five-day average traded value, ensuring that market participants can transact without significant price disruption.
In summary, while Kalpataru Projects International Ltd boasts solid operational growth, strong institutional backing, and a favourable valuation, its share price is currently under pressure due to market-wide factors and relative underperformance. Investors should weigh these dynamics carefully when considering exposure to the stock.
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