Why is National Standar falling/rising?

Recent Price Movement and Market Context

On 11 December, National Standar’s share price closed at ₹1,290.05, down ₹69.05 or 5.08% from the previous session. This decline continues a recent downtrend, with the stock losing 7.32% over the past week compared to a modest 0.52% fall in the Sensex benchmark. Over the last month, the stock has plummeted 25.64%, while the Sensex gained 1.13%. Year-to-date, the stock has suffered a staggering 70.48% loss, in stark contrast to the Sensex’s 8.55% rise. This persistent underperformance highlights the widening gap between National Standar and broader market indices.

Intraday trading on 11 December saw the stock touch a high of ₹1,393.05, a 2.5% increase, but it ultimately settled near its low of ₹1,290, indicating selling pressure. The weighted average price suggests that most volume traded closer to the lower end of the day’s range, signalling bearish sentiment. Furthermore, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—reinforcing the negative technical outlook.

Investor participation appears to be waning, with delivery volumes on 10 December falling nearly 14% below the five-day average. Despite adequate liquidity for sizeable trades, the declining volume hints at reduced confidence among shareholders.

Fundamental Weaknesses Driving the Decline

National Standar’s share price decline is underpinned by several fundamental issues. The company’s management efficiency is notably poor, with an average Return on Equity (ROE) of just 6.15%, indicating limited profitability generated from shareholders’ funds. This low ROE contrasts sharply with more efficient peers and dampens investor enthusiasm.

Long-term growth prospects appear bleak, as operating profit has contracted at an alarming annualised rate of 225.15% over the past five years. This severe decline in core earnings capacity raises concerns about the company’s ability to sustain operations and generate value.

Recent financial results have been flat or negative. The latest six-month Profit After Tax (PAT) stood at ₹5.25 crores, reflecting a 29.44% decline. Additionally, non-operating income accounted for over 106% of Profit Before Tax (PBT), suggesting that core business profitability is weak and reliant on non-recurring or ancillary income sources.

The company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) are negative, signalling operational losses and increasing the risk profile of the stock. Over the past year, profits have fallen by 33.7%, while the stock price has declined by 71.35%, underscoring the market’s reaction to deteriorating fundamentals.

Despite its size, National Standar holds no significant stake from domestic mutual funds. Given these funds’ capacity for thorough research and due diligence, their absence suggests a lack of confidence in the company’s prospects or valuation.

Consistent underperformance against benchmarks such as the BSE500 over the last three years further emphasises the stock’s struggles. While the broader market indices have delivered positive returns, National Standar has lagged considerably, eroding investor wealth and sentiment.

Conclusion: Why National Standar Is Falling

In summary, National Standar’s share price decline as of 11 December is a reflection of its weak financial health, poor profitability metrics, and disappointing growth trajectory. The stock’s consistent underperformance relative to the Sensex and sector peers, combined with negative earnings trends and low investor participation, has led to sustained selling pressure.

While the company benefits from a low debt-to-equity ratio, this strength is overshadowed by operational inefficiencies and flat to negative earnings growth. The absence of institutional backing from domestic mutual funds further signals caution among sophisticated investors.

Investors should carefully consider these factors when evaluating National Standar’s stock, as the current market sentiment and fundamental data suggest continued challenges ahead.

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