Why is Raghunath International Ltd falling/rising?

Recent Price Movement and Market Context

Despite the stock showing resilience over the past week with a 3.70% gain compared to the Sensex’s 2.55% decline, the one-month and one-year returns tell a different story. Over the last month, the stock has slipped by 3.22%, underperforming the Sensex’s 1.29% fall. More strikingly, the stock has lost 22.99% over the past year, while the Sensex gained 7.67%. This underperformance extends to longer horizons as well, with the stock lagging behind the BSE500 index over three years and three months.

Today's decline also coincides with a broader downturn in the Construction - Real Estate sector, which fell by 2.21%. The sectoral weakness has likely compounded the stock’s downward pressure. Additionally, the stock underperformed its sector by 2.78% on the day, signalling relative weakness within its peer group.

Technical indicators provide further insight into the stock’s current trend. The price remains above its 5-day and 20-day moving averages, suggesting some short-term support, but it is still trading below its 50-day, 100-day, and 200-day moving averages. This positioning indicates that the stock is struggling to regain medium- and long-term momentum.

Investor participation has also waned significantly, with delivery volumes on 08 Jan plunging by 99.68% compared to the five-day average. This sharp drop in trading activity may reflect reduced confidence or interest among investors, further pressuring the stock’s price.

Fundamental Weaknesses Weighing on the Stock

Raghunath International Ltd’s share price decline is underpinned by several fundamental challenges. The company has exhibited a negative compound annual growth rate (CAGR) of -4.36% in operating profits over the past five years, signalling deteriorating operational performance. This weak growth trajectory undermines investor confidence in the company’s ability to generate sustainable earnings.

Moreover, the company’s capacity to service its debt is notably poor, with an average EBIT to interest ratio of -0.06. This negative ratio indicates that earnings before interest and taxes are insufficient to cover interest expenses, raising concerns about financial stability and credit risk.

Profitability metrics also paint a bleak picture. The average return on equity (ROE) stands at 7.46%, reflecting low profitability relative to shareholders’ funds. This modest ROE, combined with a price-to-book value of 0.4, suggests that the stock is valued expensively relative to its earnings power, which may deter value-conscious investors.

The company’s recent financial results have been disappointing. For the nine months ending September 2025, the profit after tax (PAT) was ₹1.03 crore, representing a sharp decline of 51.64%. Additionally, cash and cash equivalents at half-year stood at a low ₹0.21 crore, indicating limited liquidity buffers.

These factors collectively contribute to the stock’s weak performance. Over the past year, profits have fallen by 44.4%, exacerbating the stock’s 22.99% negative return. The combination of declining earnings, poor debt servicing ability, and expensive valuation relative to profitability has led to a consensus view of the stock as a strong sell.

Investor Outlook and Market Positioning

While the stock has delivered an impressive 193.57% return over five years, this performance is overshadowed by recent underperformance and fundamental weaknesses. The stock’s inability to keep pace with benchmark indices such as the Sensex and BSE500 over shorter time frames highlights the challenges it faces in regaining investor favour.

Majority shareholding by non-institutional investors may also contribute to volatility and limited institutional support, which can affect liquidity and price stability. Despite being liquid enough for trading, the sharp fall in delivery volumes suggests cautious investor sentiment.

In summary, the decline in Raghunath International Ltd’s share price on 09-Jan is primarily driven by weak financial fundamentals, disappointing recent earnings, sectoral headwinds, and reduced investor participation. These factors combine to create a challenging environment for the stock, resulting in its underperformance relative to benchmarks and peers.

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 →