Why is Sandesh falling/rising?

Recent Price Movement and Market Comparison

On 20 November, Sandesh Ltd. closed at ₹1,141.75, down by ₹2.55 or 0.22%. This decline is consistent with the stock’s recent trend, having lost 1.71% over the past week and 1.14% in the last month. In stark contrast, the benchmark Sensex has gained 1.37% and 1.50% over the same respective periods, highlighting Sandesh’s relative weakness. The divergence is even more pronounced over longer horizons, with Sandesh posting a year-to-date loss of 28.70% against the Sensex’s 9.59% gain, and a one-year return of -27.90% compared to the Sensex’s 10.38% rise.

Technical Indicators and Trading Activity

Technical signals further underscore the bearish sentiment surrounding Sandesh. The stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating sustained downward momentum. Additionally, investor participation appears to be waning, with delivery volumes on 19 November falling sharply by 82.37% compared to the five-day average. This decline in trading activity suggests reduced confidence among shareholders and a lack of fresh buying interest. Although liquidity remains adequate for trading, the stock’s erratic trading pattern—missing one trading day in the last 20—adds to the uncertainty.

Fundamental Weaknesses Driving the Decline

Sandesh’s share price decline is underpinned by significant fundamental challenges. Over the past five years, the company’s operating profits have contracted at a staggering compound annual growth rate (CAGR) of -175.51%, signalling severe operational difficulties. Profitability metrics remain subdued, with an average return on equity (ROE) of just 9.98%, reflecting limited efficiency in generating shareholder returns.

The latest quarterly results for September 2025 further exacerbate concerns. The company reported a profit after tax (PAT) of ₹3.86 crore, marking a sharp 81.6% decline compared to the average of the previous four quarters. Return on capital employed (ROCE) for the half-year period is at a low 3.64%, while the debtors turnover ratio has dropped to 5.26 times, indicating potential issues in receivables management and cash flow generation.

Moreover, Sandesh is currently trading with negative EBITDA, which heightens the risk profile of the stock. Over the last year, profits have fallen by 77.1%, a stark contrast to the stock’s modest 40.77% gain over three years, which itself trails the Sensex’s 38.87% return. This disconnect between stock price appreciation and deteriorating earnings suggests speculative or technical factors may have influenced past gains, but recent fundamentals have caught up with the valuation.

Investor Sentiment and Institutional Interest

Investor sentiment towards Sandesh appears cautious. Despite the company’s size, domestic mutual funds hold no stake in the stock, a notable omission given their capacity for detailed research and due diligence. This absence of institutional backing may reflect discomfort with the company’s current valuation or business prospects. The stock’s underperformance relative to the broader BSE500 index over multiple time frames—three years, one year, and three months—reinforces the narrative of a company struggling to keep pace with its peers.

Conclusion: Why Sandesh is Falling

In summary, Sandesh Ltd.’s recent price decline is a reflection of its weak financial performance, deteriorating profitability, and lack of institutional support. The company’s negative earnings trajectory, poor return ratios, and declining investor participation have weighed heavily on the stock. While the broader market and benchmark indices have shown resilience and growth, Sandesh’s inability to deliver consistent profits and its underwhelming operational metrics have led to sustained selling pressure. Investors should remain cautious and closely monitor the company’s financial health and market positioning before considering exposure to this stock.

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