Why is NCC falling/rising?

Recent Price Movement and Market Comparison

The stock has been on a steady decline, losing 4.94% over the past week and a significant 15.84% in the last month. This contrasts sharply with the broader Sensex, which declined marginally by 0.40% over the week and 0.23% over the month. Year-to-date, NCC has plummeted by 44.23%, while the Sensex has gained 8.12%. Over the last year, the stock’s return stands at a stark -49.24%, compared to the Sensex’s positive 5.36% gain. Despite this recent weakness, the stock has delivered strong long-term returns, with a 5-year gain of 171.12%, outperforming the Sensex’s 79.90% over the same period.

Technical Indicators and Trading Activity

On 18-Dec, NCC’s share price touched a new 52-week low of ₹152.6, signalling continued bearish sentiment. The stock has underperformed its sector by 0.47% today and has declined for three consecutive days, losing 5.38% in that period. It is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating sustained downward momentum. Interestingly, investor participation has increased, with delivery volumes rising by 15.47% to 13.86 lakh shares on 17-Dec compared to the five-day average, suggesting heightened trading interest despite the falling price. The stock remains sufficiently liquid for sizeable trades, supporting active market engagement.

Fundamental Strengths Amidst Weakness

Despite the recent price decline, NCC exhibits several positive fundamentals. The company maintains a high return on capital employed (ROCE) of 16.94%, reflecting efficient management and capital utilisation. Its debt servicing capability remains strong, with a low Debt to EBITDA ratio of 0.97 times, indicating manageable leverage. Long-term growth prospects appear healthy, with net sales growing at an annual rate of 22.70% and operating profit expanding by 17.73%. The stock’s valuation is attractive, trading at an enterprise value to capital employed ratio of 1.2, which is fair relative to peer averages. Institutional investors hold a significant 29.52% stake, suggesting confidence from knowledgeable market participants.

Weak Quarterly Results and Financial Concerns

However, the recent quarterly performance has weighed heavily on investor sentiment. The company reported a PAT of ₹154.70 crore for the quarter ended September 2025, marking a sharp decline of 22.9% compared to the previous four-quarter average. Operating profit to interest coverage ratio fell to a low of 2.29 times, signalling tighter financial margins and increased risk. Additionally, the debt-equity ratio rose to 2.76 times at half-year, the highest level recorded, raising concerns about the company’s leverage and financial stability. These factors have contributed to the stock’s underperformance relative to the broader market, which has generated positive returns over the past year.

Conclusion: Why NCC Is Falling

The decline in NCC’s share price on 18-Dec and over recent weeks is primarily driven by disappointing quarterly earnings, increased leverage, and a deteriorating interest coverage ratio. These financial headwinds have overshadowed the company’s strong long-term growth and efficient capital use. The stock’s persistent underperformance against market benchmarks and sector peers has further dampened investor confidence, leading to sustained selling pressure. While institutional investors maintain a sizeable stake, the negative earnings trend and elevated debt levels have prompted caution among market participants, resulting in the stock trading at a new 52-week low and below all key moving averages.

Investors should weigh these factors carefully, considering both the company’s operational strengths and recent financial challenges before making investment decisions.

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