Why is RCF falling/rising?

Recent Price Movement and Market Performance

RCF’s stock has underperformed significantly in the short term, with an 8.29% decline over the past week compared to a marginal 0.10% dip in the Sensex. Over the last month, the stock fell 5.71%, while the benchmark index gained 0.45%. Year-to-date, the divergence is even starker, with RCF down 19.79% against the Sensex’s 8.25% rise. This underperformance extends to the one-year and three-year horizons, where RCF’s returns of -13.28% and +16.69% lag behind the Sensex’s 5.59% and 35.79%, respectively.

On 25-Nov, the stock touched an intraday low of ₹138.25, down 4.23%, with heavier trading volume near this low point, indicating selling pressure. The weighted average price also skewed towards the lower end of the day’s range. Furthermore, RCF is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling a bearish technical trend. Investor participation appears to be waning, as delivery volumes on 24 Nov dropped by over 40% compared to the five-day average, suggesting reduced conviction among buyers.

Operational Strengths Amidst Price Weakness

Despite the recent price weakness, RCF’s operational performance shows some encouraging signs. The company reported its highest quarterly net sales at ₹5,292.58 crores and a peak PBDIT of ₹214.33 crores in September 2025. Its operating profit to interest coverage ratio stands robust at 3.91 times, reflecting a strong ability to service debt. The debt to EBITDA ratio remains low at 1.26 times, underscoring manageable leverage. Additionally, RCF’s return on capital employed (ROCE) is a respectable 6.9%, and the enterprise value to capital employed ratio of 1.4 suggests the stock is attractively valued relative to its peers.

Profit growth has been impressive over the past year, with a 67.8% increase, and the company’s PEG ratio of 0.4 indicates that earnings growth is not fully priced into the stock. These factors typically support a positive outlook for the share price.

Challenges Weighing on Investor Sentiment

However, the stock’s decline is largely attributable to concerns over its long-term growth trajectory and market positioning. Operating profit has contracted at an annualised rate of 4.56% over the past five years, signalling structural challenges in sustaining profitability. This sluggish growth contrasts with the company’s recent profit surge, raising questions about consistency.

Investor confidence appears muted, as reflected by the minimal stake held by domestic mutual funds—only 0.49%. Given their capacity for thorough research and due diligence, this low holding may indicate reservations about the company’s valuation or business prospects. Furthermore, RCF has underperformed the broader BSE500 index over multiple time frames, including the last three years, one year, and three months, reinforcing the perception of below-par performance.

The combination of technical weakness, subdued investor participation, and concerns over sustainable growth has contributed to the stock’s recent fall. While operational metrics provide some support, the market appears cautious, favouring stocks with stronger growth visibility and institutional backing.

Outlook for Investors

For investors, the current scenario suggests a need for prudence. Although RCF’s valuation metrics and debt servicing ability are positives, the persistent downtrend and underwhelming long-term growth raise red flags. The stock’s liquidity remains adequate for moderate trade sizes, but the ongoing decline in delivery volumes hints at waning conviction. Monitoring quarterly results and institutional activity will be crucial to gauge any potential turnaround.

In summary, RCF’s stock is falling primarily due to its sustained underperformance relative to benchmarks, weak technical indicators, and cautious investor sentiment driven by long-term growth concerns, despite some encouraging operational results.

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 →