Why is Religare Enterp. falling/rising?

Recent Price Movement and Market Performance

Religare Enterprises has been on a downward trajectory over the past week, with the stock losing 7.23% compared to a near-flat movement in the Sensex, which declined by just 0.06% in the same period. Over the last month, the stock has fallen 7.13%, while the broader market has gained 0.82%. Year-to-date, the stock is down 11.81%, in stark contrast to the Sensex’s 8.65% rise. Even over the past year, Religare’s shares have declined by 1.90%, whereas the benchmark index has appreciated by 7.31%. These figures underscore the stock’s persistent underperformance relative to the broader market.

On the day of the decline, the stock underperformed its sector by 3.32%, hitting an intraday low of ₹240.65, down 4.49%. The weighted average price indicates that a significant volume of shares traded near this low, suggesting selling pressure. The stock has now fallen for four consecutive days, accumulating a 7.52% loss during this period. Despite trading above its 200-day moving average, the share price remains below its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short-term weakness.

Fundamental Factors Behind the Decline

While Religare Enterprises boasts strong long-term fundamentals, including a compound annual growth rate (CAGR) of 26.73% in operating profits, recent quarterly results have disappointed investors. The company reported flat results for the quarter ending September 2025, with profit after tax (PAT) falling sharply by 24.4% to ₹38.83 crores. Similarly, profit before tax excluding other income declined by 19.35% to ₹38.97 crores. These declines have raised concerns about the company’s near-term earnings momentum.

Moreover, the company’s return on equity (ROE) stands at a modest 3.6%, which, combined with a price-to-book value of 2.8, suggests an expensive valuation relative to its earnings quality. Although the stock trades at a discount compared to its peers’ historical valuations, the disconnect between rising profits—up 178.9% over the past year—and negative share price returns has created uncertainty among investors. The company’s price-to-earnings-to-growth (PEG) ratio of 0.4 indicates that the market may be cautious about the sustainability of profit growth.

Institutional Investor Sentiment and Liquidity

Another critical factor contributing to the stock’s decline is the reduced participation by institutional investors. Over the previous quarter, institutional holdings have decreased by 1.64%, with these investors now collectively holding 18.08% of the company. Given their superior analytical capabilities and resources, the withdrawal of institutional support often signals concerns about the company’s fundamentals or valuation, which can weigh heavily on the stock price.

Despite this, investor participation on the retail side appears to be rising, as evidenced by a 59.73% increase in delivery volume to 6.8 lakh shares on 21 November compared to the five-day average. The stock remains sufficiently liquid, with trading volumes supporting transactions of up to ₹0.4 crore based on 2% of the five-day average traded value. However, this increased retail activity has not been enough to offset the broader negative sentiment.

Religare Enterprises’ underperformance is also evident when compared to the BSE500 index over multiple time frames. The stock has lagged the broader market over the last three years, one year, and three months, highlighting persistent challenges in regaining investor confidence despite its long-term growth prospects.

Conclusion: Why the Stock is Falling

The decline in Religare Enterprises’ share price on 24 November is primarily attributable to disappointing quarterly earnings that showed a significant drop in profits, coupled with a valuation that appears expensive relative to its current returns. The reduction in institutional investor holdings further exacerbates negative sentiment, signalling caution among sophisticated market participants. Although the company demonstrates strong long-term operating profit growth, the short-term financial performance and market dynamics have led to sustained selling pressure.

Investors should weigh these factors carefully, considering both the company’s robust historical growth and the recent challenges reflected in its share price performance. The stock’s liquidity and rising retail participation provide some support, but the prevailing market sentiment remains cautious amid flat quarterly results and institutional selling.

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