Why is NCC falling/rising?

Recent Price Movement and Market Context

The stock has been under pressure for the past two days, losing nearly 4% in that period and significantly underperforming the Capital Goods sector, which itself declined by 2.02% on the same day. NCC’s share price touched an intraday low of ₹161.5, signalling persistent selling interest. The weighted average price indicates that most trading volume occurred near the day’s low, suggesting bearish sentiment among investors. 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 has also waned, with delivery volumes dropping by over 43% compared to the five-day average, indicating reduced conviction among shareholders. Despite this, liquidity remains adequate for sizeable trades, with an estimated trade size capacity of ₹1.1 crore based on recent average traded value.

Fundamental Performance and Valuation

Despite the recent price weakness, NCC Ltd exhibits some positive fundamental attributes. The company maintains a strong return on capital employed (ROCE) of 16.94%, reflecting efficient management and effective utilisation of capital. Its debt servicing capability is robust, with a low Debt to EBITDA ratio of 0.97 times, indicating manageable leverage. Long-term growth metrics remain healthy, with net sales expanding at an annualised rate of 22.7% and operating profit growing at 17.73% per annum. The stock’s valuation appears reasonable, trading at an enterprise value to capital employed ratio of 1.3, which is in line with historical averages for its peer group.

Institutional investors hold a significant stake of 29.52%, suggesting that knowledgeable market participants continue to back the company despite recent setbacks. However, this has not translated into price support amid broader market pressures and company-specific challenges.

Weak Quarterly Results Weigh on Sentiment

The primary catalyst for the recent decline is the company’s disappointing quarterly performance reported in September 2025. Profit before tax excluding other income (PBT less OI) fell sharply by 33.5% compared to the average of the previous four quarters, registering ₹166.57 crore. Net profit after tax (PAT) also declined by 22.9% to ₹154.70 crore, while net sales dropped by 16.8% to ₹4,543.01 crore over the same period. These results highlight a significant slowdown in operational performance, raising concerns about near-term earnings momentum.

Over the past year, NCC’s stock has underperformed dramatically, delivering a negative return of 48.13%, while the broader market indices such as the Sensex and BSE500 have posted positive gains of 4.15% and 0.62% respectively. This stark divergence underscores the challenges the company faces in regaining investor confidence and market share.

Outlook and Investor Considerations

While NCC Ltd’s long-term growth prospects and management efficiency remain commendable, the immediate outlook is clouded by weak quarterly earnings and sustained price underperformance. The stock’s failure to hold above key technical levels and the decline in investor participation suggest caution among market participants. Investors should weigh the company’s attractive valuation and institutional backing against the recent operational setbacks and sector headwinds before making investment decisions.

In summary, NCC’s share price decline on 08-Dec reflects a combination of disappointing financial results, negative market sentiment within the capital goods sector, and a broader trend of underperformance relative to benchmark indices. Until the company demonstrates a clear turnaround in earnings and sales growth, the stock is likely to remain under pressure.

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