Why is Naga Dhunseri Group Ltd falling/rising?

Recent Price Movements and Market Comparison

The stock has been on a downward trajectory over recent periods, with a one-week decline of 4.48% compared to the Sensex’s modest fall of 0.79%. Over the past month, Naga Dhunseri’s shares have dropped 6.03%, significantly underperforming the Sensex’s 1.47% decline. Year-to-date, the stock has fallen 6.76%, more than triple the Sensex’s 2.08% decrease. Most strikingly, over the last twelve months, the stock has plummeted by 33.21%, while the Sensex has gained 10.27%. This stark contrast highlights the stock’s relative weakness amid a generally positive market environment.

On the day in question, the stock hit a new 52-week low of ₹2,666, signalling persistent selling pressure. It also underperformed its sector by 2.24%, indicating that the weakness is not isolated but more pronounced than peers. Technical indicators reinforce this bearish sentiment, with the share price trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. Such positioning often signals a lack of short- to long-term momentum, discouraging new buying interest.

Investor participation appears to be waning as well. Delivery volume on 16 January was recorded at 321, representing a slight 0.25% decline against the five-day average delivery volume. This reduction in investor engagement may contribute to the stock’s diminished liquidity and price softness.

Fundamental Performance and Valuation

Despite the recent share price weakness, Naga Dhunseri Group has reported some positive operational metrics. The company’s profit before tax (PBT) excluding other income for the quarter ending September 2025 surged by an impressive 391.78% to ₹14.95 crores. Additionally, net sales over the latest six months stood at ₹288.12 crores, reflecting growth in top-line revenue. These figures suggest that the company is generating improved earnings momentum in the short term.

Valuation metrics also present an interesting picture. The stock trades at a price-to-book value of 0.2, indicating it is valued at a significant discount relative to its peers’ historical averages. Its return on equity (ROE) for the latest period is 2.2%, which, while modest, points to some level of profitability. Over the longer term, however, the average ROE stands at 8.62%, which is considered weak for sustained fundamental strength.

Despite these positives, the stock’s overall financial health appears fragile. Over the past year, profits have declined by 22.6%, which aligns with the steep 33.21% drop in share price. This erosion in profitability likely weighs heavily on investor sentiment, contributing to the stock’s underperformance relative to the broader market and its sector peers.

Market Sentiment and Shareholder Structure

The majority of shares remain held by promoters, which can be a double-edged sword. While promoter holding often signals confidence in the company’s prospects, it can also limit free float and liquidity, potentially exacerbating price volatility during periods of weak performance. The stock’s liquidity, although sufficient for moderate trade sizes, does not appear robust enough to attract significant new investment amid the current downtrend.

Conclusion: Why the Stock is Falling

The decline in Naga Dhunseri Group Ltd’s share price on 19 January and over recent periods can be attributed primarily to its sustained underperformance relative to the broader market and sector benchmarks. Despite some encouraging quarterly results and attractive valuation metrics, the company’s weak long-term profitability, as evidenced by a modest ROE and declining profits, has undermined investor confidence. The stock’s technical weakness, hitting new 52-week lows and trading below all major moving averages, further deters buying interest. Reduced investor participation and limited liquidity compound these challenges, resulting in continued downward pressure on the share price.

In contrast to the broader market’s positive returns, Naga Dhunseri’s significant negative returns over the past year highlight the stock’s struggles to keep pace with market gains. Investors appear cautious, favouring alternatives with stronger fundamentals and more consistent performance. Until the company demonstrates sustained profit growth and improved financial metrics, the stock is likely to remain under pressure.

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 →