Why is Kitex Garments falling/rising?

Recent Price Movement and Market Comparison

On 05 December, Kitex Garments closed at ₹199.80, down by ₹1.25 or 0.62% from the previous session. This decline is part of a broader trend, with the stock having fallen by 6.46% over the past week, significantly underperforming the Sensex, which remained virtually flat with a marginal 0.01% gain during the same period. Over the last month, the stock has declined by 2.66%, while the Sensex advanced by 2.70%. Year-to-date, Kitex Garments has lost 9.36% in value, contrasting sharply with the Sensex’s 9.69% gain. The one-year performance further highlights the stock’s struggles, with a 17.06% loss compared to the Sensex’s 4.83% rise.

These figures underscore a persistent weakness in Kitex Garments’ share price, which has been exacerbated by a five-day consecutive decline resulting in a cumulative loss of 6.32%. 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. Additionally, investor participation appears to be waning, with delivery volumes on 04 December falling by 1.23% compared to the five-day average, suggesting reduced buying interest.

Fundamental Challenges and Financial Performance

Kitex Garments’ recent financial disclosures have contributed significantly to the negative sentiment surrounding the stock. The company reported a sharp decline in net sales for the quarter ended September 2025, with revenues falling by 43.44% to ₹122.10 crores. This steep contraction in sales has weighed heavily on profitability, with operating profit to interest ratio plunging to a low of -1.94 times, indicating that operating losses are insufficient to cover interest expenses. The net profit after tax (PAT) for the quarter was a loss of ₹19.05 crores, representing a dramatic 151.0% decline compared to the previous period.

Over the longer term, Kitex Garments has exhibited weak fundamental growth. Net sales have increased at a modest annual rate of 7.63% over the past five years, while operating profit has grown at an even slower pace of 3.83%. This sluggish growth trajectory, coupled with operating losses in recent quarters, has undermined investor confidence. The company’s return on capital employed (ROCE) stands at a low 5.1%, and its enterprise value to capital employed ratio of 2.4 suggests a relatively expensive valuation despite the stock trading at a discount to its peers’ historical averages.

Profitability has also deteriorated over the past year, with profits falling by 24.1%, further compounding the stock’s underperformance. While the broader market, represented by the BSE500 index, has generated a positive return of 2.12% over the last year, Kitex Garments has lagged considerably, delivering negative returns of 17.06% during the same period.

Investor interest from domestic mutual funds remains minimal, with holdings at just 0.34%. Given that mutual funds typically conduct thorough research before investing, this low stake may reflect concerns about the company’s current valuation or business prospects.

Liquidity and Trading Considerations

Despite the negative price action, Kitex Garments remains sufficiently liquid for trading, with the average traded value supporting trade sizes of approximately ₹0.39 crores based on 2% of the five-day average traded value. However, the declining delivery volumes and consistent price falls suggest that market participants are cautious, possibly awaiting clearer signs of operational turnaround or improved financial performance before committing further capital.

Conclusion

The decline in Kitex Garments’ share price as of 05 December is primarily driven by disappointing quarterly results marked by a steep fall in net sales and significant operating losses. The company’s weak long-term growth metrics and poor profitability have led to sustained underperformance relative to the broader market indices. Technical indicators and reduced investor participation further reinforce the bearish sentiment. While the stock remains liquid enough for trading, the prevailing fundamentals and market trends suggest continued caution among investors.

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 →