Why is Relicab Cable falling/rising?

Recent Price Movement and Market Performance

The stock’s decline on 01-Dec was accompanied by an intraday low of Rs. 43.50, with trading volumes weighted towards the lower price levels, indicating selling pressure. Relicab Cable underperformed its sector by 4.21% on the day, and it is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical weakness suggests a bearish sentiment among investors.

Investor participation has also waned, with delivery volumes on 28 Nov falling by 12.74% compared to the five-day average, signalling reduced buying interest. Despite the stock’s liquidity being sufficient for sizeable trades, the downward momentum remains strong.

Long-Term Underperformance Against Benchmarks

Relicab Cable’s price performance has been notably poor over multiple time horizons. Over the past week, the stock declined by 4.56%, while the Sensex gained 0.87%. The one-month return shows a steep fall of 28.35%, contrasting with a 2.03% rise in the Sensex. Year-to-date, the stock has lost 52.59%, whereas the benchmark index has appreciated by 9.60%. Over the last year, the stock’s return was a negative 59.94%, compared to a positive 7.32% for the Sensex. Even over three and five years, the stock’s gains of 11.54% and 81.70% respectively lag behind the Sensex’s 35.33% and 91.78% returns.

Fundamental Strengths and Valuation

Despite the negative price action, Relicab Cable reported positive quarterly results in September 2025, with net sales growing by 22.75% to Rs. 13.65 crore. The company’s return on capital employed (ROCE) stands at a respectable 14.9%, and it maintains an attractive valuation with an enterprise value to capital employed ratio of 2.3. Relative to its peers, the stock is trading at a discount to historical valuations, which could be seen as a potential value opportunity.

However, these positives are overshadowed by the company’s declining profitability, with profits falling by 37.7% over the past year. This erosion in earnings has contributed to the steep negative returns experienced by shareholders.

Weaknesses in Financial Health and Promoter Concerns

Relicab Cable’s long-term fundamental strength is questionable, with a compound annual growth rate (CAGR) of operating profits at just 13.52% over the last five years. More concerning is the company’s weak ability to service its debt, reflected in a poor average EBIT to interest ratio of 1.47. This indicates limited cushion to cover interest expenses, raising concerns about financial stability.

Adding to investor apprehension is the extremely high level of promoter share pledging, with 99.94% of promoter shares pledged. In volatile or falling markets, such high pledging often exerts additional downward pressure on stock prices, as promoters may be forced to sell shares to meet margin calls or debt obligations.

These factors, combined with the stock’s consistent underperformance relative to the BSE500 index over the last three years, one year, and three months, reinforce the bearish outlook among market participants.

Conclusion: Why Relicab Cable Is Falling

The decline in Relicab Cable’s share price on 01-Dec is primarily driven by a combination of weak financial fundamentals, poor debt servicing capacity, and the heavy pledging of promoter shares. Despite some positive sales growth and attractive valuation metrics, the company’s deteriorating profitability and sustained underperformance against market benchmarks have weighed heavily on investor sentiment.

Technical indicators further confirm the bearish trend, with the stock trading below all major moving averages and experiencing reduced investor participation. The new 52-week low reached on the day underscores the prevailing negative momentum. Until the company demonstrates stronger earnings growth and reduces promoter share pledging, the stock is likely to remain under pressure.

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