Why is Nocil falling/rising?

Recent Price Movement and Market Context

Nocil’s stock price has been under pressure, declining 5.51% over the past week and 11.28% in the last month, while the Sensex has gained modestly during these periods. Year-to-date, the stock has plummeted nearly 36%, starkly contrasting with the Sensex’s 9.05% rise. Over the last year, the stock has delivered a negative return of 42.86%, whereas the benchmark index has advanced by 3.75%. This persistent underperformance extends over three years, with Nocil’s shares falling 34.75% compared to a 37.89% gain in the Sensex, highlighting a significant divergence from broader market trends.

On the day in question, the stock traded close to its 52-week low, just 0.7% above the bottom price of ₹155, signalling sustained bearish sentiment. It also underperformed its sector by nearly 2%, and is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating a weak technical position. Investor participation has waned, with delivery volumes on 12 Dec falling by almost 68% compared to the five-day average, suggesting reduced buying interest.

Fundamental Weaknesses Weighing on the Stock

The primary driver behind Nocil’s share price decline is its deteriorating financial performance. The company reported a fall in net sales by 4.66%, culminating in very negative results for the quarter ended September 2025. Operating cash flow for the year hit a low of ₹24.03 crores, while profit before tax excluding other income dropped sharply by 52.9% compared to the previous four-quarter average. Net profit after tax also declined by 47.9% over the same period, underscoring significant operational challenges.

Long-term growth prospects appear bleak, with operating profit shrinking at an annual rate of 5.87% over the past five years. This sluggish growth trajectory has not gone unnoticed by investors, who have penalised the stock accordingly. Despite a low debt-to-equity ratio averaging zero, which is a positive aspect, the company’s return on equity remains modest at 3.6%, raising questions about capital efficiency.

Valuation metrics further compound concerns. The stock trades at a price-to-book ratio of 1.5, which is considered expensive relative to its peers’ historical averages. This premium valuation is difficult to justify given the company’s declining profitability and poor returns. Over the past year, profits have fallen by more than 55%, yet the stock has not adjusted sufficiently to reflect this deterioration, leading to a disconnect between price and fundamentals.

Consistent Underperformance Against Benchmarks

Nocil’s consistent underperformance relative to the BSE500 and Sensex indices over multiple years highlights structural issues. The stock has failed to keep pace with broader market gains, delivering negative returns in each of the last three annual periods. This trend suggests that investors are increasingly wary of the company’s growth prospects and financial health, opting instead for better-performing alternatives within the specialty chemicals sector and beyond.

Conclusion: Why Nocil Is Falling

The decline in Nocil’s share price on 15-Dec and over recent periods is primarily attributable to its weak financial results, poor long-term growth, and consistent underperformance relative to market benchmarks. Despite a strong balance sheet with negligible debt, the company’s profitability metrics and cash flows have deteriorated significantly, eroding investor confidence. The stock’s premium valuation relative to its peers further exacerbates concerns, as it fails to reflect the underlying operational challenges. Reduced investor participation and technical weakness reinforce the bearish outlook, making the stock a challenging proposition for investors seeking growth or value in the specialty chemicals sector.

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 →