Why is Kesar Terminals & Infrastructure Ltd falling/rising?

Intraday Performance and Market Context

On 23 January, Kesar Terminals & Infrastructure Ltd demonstrated a strong upward movement, touching an intraday high of ₹76.80, representing a 9.54% increase from previous levels. This rally was significant as it outpaced the miscellaneous sector, which declined by 2.19% on the same day. The stock’s performance also exceeded the sector by 9.01%, indicating robust investor interest relative to its peers. Notably, the weighted average price suggested that a larger volume of shares traded closer to the lower end of the day’s price range, hinting at some profit-taking or cautious trading despite the overall rise.

From a technical perspective, the stock price currently sits above its 5-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day moving averages. This positioning suggests a short-term bullish momentum within a longer-term bearish or consolidative trend. The liquidity of the stock remains adequate, with trading volumes sufficient to support sizeable transactions without significant price disruption.

Long-Term Performance and Fundamental Challenges

Despite the recent price uptick, Kesar Terminals & Infrastructure Ltd’s longer-term performance reveals a more cautious picture. Over the past year, the stock has declined by 6.42%, underperforming the Sensex, which gained 6.56% during the same period. Year-to-date and one-month returns also reflect negative trends, with the stock falling 8.66% and 8.52% respectively, both worse than the Sensex benchmarks. However, the company has delivered impressive gains over three and five years, with returns of 101.07% and 92.79%, substantially outperforming the Sensex’s 33.80% and 66.82% respectively. This suggests that while the stock has faced recent headwinds, it has historically rewarded patient investors.

Fundamentally, the company faces significant challenges. Its book value is negative, signalling weak long-term financial health. Net sales have declined at an annual rate of 1.91% over the past five years, and operating profit has stagnated, showing no growth. The company’s debt profile is moderate, with an average debt-to-equity ratio of zero, indicating limited leverage but also potentially constrained capital for expansion.

Recent quarterly results have been disappointing, with a PAT loss of ₹9.75 crores, down 36.4% compared to the previous four-quarter average. Net sales for the quarter fell by 10.1%, and the operating profit to interest coverage ratio dropped to a low of 0.11 times, highlighting profitability pressures and interest servicing challenges. These factors contribute to the stock’s classification as a strong sell by some analysts, reflecting concerns over its fundamental viability.

Investor Sentiment and Participation

Investor participation has shown signs of resurgence, with delivery volumes on 30 December rising dramatically by 1318.67% compared to the five-day average. This spike in delivery volume suggests renewed interest from long-term investors or institutional buyers, which may have contributed to the recent price rally. The majority shareholding by promoters also provides a degree of stability, as promoter confidence often influences market perception positively.

Conclusion: A Short-Term Rally Amid Structural Concerns

Kesar Terminals & Infrastructure Ltd’s 6.83% rise on 23 January reflects a short-term rebound driven by increased investor participation and relative outperformance against a declining sector. However, the company’s weak fundamental profile, including negative book value, declining sales, and poor profitability metrics, tempers enthusiasm for sustained gains. The stock’s underperformance relative to the broader market over the past year further underscores these concerns.

Investors should weigh the recent positive price action against the backdrop of structural challenges and cautious technical indicators. While the stock shows signs of short-term strength, its long-term outlook remains uncertain without a turnaround in financial performance.

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 →