Why is Nidhi Granites Ltd falling/rising?

Short-Term Price Movement and Market Performance

The stock has been under pressure over the past week, registering a decline of 6.31%, in stark contrast to the Sensex’s modest gain of 0.46% during the same period. Over the last month, Nidhi Granites has fallen by 8.87%, while the benchmark index declined by only 0.76%. Year-to-date, the stock is down 5.48%, slightly worse than the Sensex’s 0.18% drop. This recent weakness is further highlighted by the stock’s consecutive two-day fall, which has resulted in a cumulative loss of 6.8% in that short span.

Intraday trading on 06-Jan saw the stock touch a low of ₹358.35, representing a 5% drop from previous levels. The weighted average price indicates that a larger volume of shares traded closer to this low, signalling selling pressure. Additionally, the stock’s moving averages reveal a nuanced picture: while it remains above its 200-day moving average, it is trading below its 5-day, 20-day, 50-day, and 100-day moving averages, suggesting short-term bearish momentum despite a strong long-term trend.

Investor participation appears to be waning, with delivery volumes on 05 Jan falling by 11.43% compared to the five-day average. This decline in investor engagement may be contributing to the stock’s recent softness, as reduced buying interest can exacerbate downward price movements. Despite this, liquidity remains adequate, allowing for reasonable trade sizes without significant price impact.

Strong Fundamentals and Long-Term Growth

Despite the recent price softness, Nidhi Granites Ltd boasts robust financial health and impressive growth metrics. The company maintains a low average debt-to-equity ratio of 0.05 times, underscoring prudent financial management and limited leverage risk. This conservative capital structure provides a solid foundation for sustainable growth.

Operationally, the company has demonstrated remarkable expansion. Net sales have grown at an annualised rate of 175.82%, while operating profit has increased by 55.32% over the long term. The latest six-month results ending September 2025 reinforce this positive trend, with net sales rising by 54.30% to ₹32.99 crores. Profit before tax excluding other income for the quarter surged by 134.7% compared to the previous four-quarter average, reaching ₹1.76 crores. Additionally, the company’s profit after tax for the latest six months stood at ₹3.53 crores, reflecting healthy profitability.

These strong fundamentals have translated into exceptional returns for investors over the years. The stock has delivered a staggering 1,226.16% gain over three years and an extraordinary 2,505.63% over five years, vastly outperforming the Sensex’s respective returns of 42.01% and 76.57%. Even in the last year, Nidhi Granites generated a 63.83% return, significantly outpacing the benchmark’s 9.10% gain. This consistent outperformance highlights the company’s ability to create shareholder value over the medium to long term.

Balancing Short-Term Volatility with Long-Term Potential

The recent decline in Nidhi Granites’ share price appears to be driven primarily by short-term market dynamics rather than fundamental weaknesses. The stock’s underperformance relative to the sector and benchmark indices over the past week and month suggests profit-taking or cautious sentiment among investors. The drop in delivery volumes and trading closer to intraday lows further indicate a temporary pullback in investor enthusiasm.

However, the company’s strong financial position, low leverage, and impressive growth in sales and profits provide a compelling backdrop for long-term investors. The consistent outperformance over multiple years and positive recent quarterly results suggest that the stock’s fundamentals remain intact. Investors may view the current dip as a potential entry point, especially given the stock’s history of delivering substantial returns over extended periods.

In conclusion, while Nidhi Granites Ltd is experiencing a short-term price correction as of 06-Jan, its robust growth metrics and financial health continue to support a positive long-term outlook. Market participants should weigh the recent volatility against the company’s proven track record and fundamental strength when making investment decisions.

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