Short-Term Price Movement and Market Performance
The stock has been under pressure over the past week, registering a decline of 8.94%, significantly underperforming the Sensex benchmark which fell by only 1.83% during the same period. Year-to-date, the stock has dropped 9.00%, while the Sensex has declined by a comparatively modest 1.58%. This recent weakness is further highlighted by the stock’s opening gap down of 3.22% on 12-Jan and an intraday low of ₹12,531.40, representing a 7.52% fall from previous levels.
Technical indicators also point to bearish momentum, with Maharashtra Scooters trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. The weighted average price suggests that a larger volume of shares exchanged hands near the day’s low, indicating selling pressure. Additionally, investor participation appears to be waning, as delivery volumes on 9 Jan dropped by 57.51% compared to the five-day average, signalling reduced conviction among buyers.
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Long-Term Growth and Financial Strength
Despite the recent price weakness, Maharashtra Scooters boasts a strong long-term growth profile. The company has achieved a compound annual growth rate (CAGR) of 84.70% in net sales, reflecting a healthy expansion trajectory. Its latest six-month financials reveal net sales of ₹277.46 crores and a profit after tax (PAT) of ₹271.19 crores, both higher than previous periods. The company’s cash and cash equivalents have also reached a peak of ₹189.63 crores, underscoring solid liquidity.
From a valuation standpoint, Maharashtra Scooters appears attractively priced with a price-to-book value of 0.4 and a return on equity (ROE) of 0.9. The stock trades at a discount relative to its peers’ historical averages. Over the past year, the company’s profits have surged by 77.2%, outpacing the 37.16% return generated by the stock itself. This results in a favourable price/earnings-to-growth (PEG) ratio of 0.6, indicating potential undervaluation given its earnings growth.
Institutional investors have shown increasing confidence, raising their stake by 0.67% in the previous quarter to hold a collective 10.07% of the company’s shares. This trend suggests that well-informed market participants recognise the company’s fundamental strengths despite short-term volatility.
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Consistent Outperformance Over the Years
Looking beyond the immediate price fluctuations, Maharashtra Scooters has delivered remarkable returns over the medium to long term. The stock has appreciated by 190.41% over three years and an impressive 252.00% over five years, substantially outperforming the Sensex’s respective gains of 39.89% and 69.39%. This consistent outperformance highlights the company’s ability to generate shareholder value over time, despite episodic corrections.
In summary, the recent decline in Maharashtra Scooters’ share price appears to be driven primarily by short-term selling pressure and technical weakness rather than fundamental deterioration. The stock’s underperformance relative to the broader market and sector, coupled with falling investor participation and trading below key moving averages, has contributed to the current downtrend. However, the company’s strong financial results, robust sales growth, attractive valuation metrics, and rising institutional interest provide a solid foundation for potential recovery and long-term appreciation.
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