Why is Servotech Renew falling/rising?

Dec 02 2025 01:01 AM IST

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As of 01-Dec, Servotech Renewable Power System Ltd’s stock price has declined to ₹90.00, reflecting a 1.22% drop on the day and marking a fresh 52-week low. This downward movement is underpinned by a combination of disappointing recent financial results, weakening investor participation, and underperformance relative to market benchmarks.

Recent Price Movement and Market Comparison

Servotech Renewable Power System Ltd closed at ₹90.00, down ₹1.11 or 1.22% as of 08:59 PM on 01-Dec, marking a continuation of a downward trend that has seen the stock underperform significantly against broader market indices. Over the past week, the stock declined by 4.94%, contrasting sharply with the Sensex’s modest gain of 0.83%. The one-month performance is even more stark, with Servotech shedding 25.58% while the Sensex advanced by 1.76%. Year-to-date, the stock has plunged 45.99%, whereas the Sensex has risen by 10.70%. Over the last year, Servotech’s returns have been negative 49.72%, a stark underperformance compared to the Sensex’s 8.47% gain.

Today’s trading saw the stock hit a new 52-week low of ₹89.70, underscoring the bearish sentiment. The share price is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained downward momentum. Additionally, the stock underperformed its sector by 1.34% on the day, further highlighting relative weakness.

Investor participation has also diminished, with delivery volumes on 28 Nov falling by 18.56% compared to the five-day average, indicating reduced buying interest. Despite this, liquidity remains adequate for moderate trade sizes, with a 2% average traded value supporting transactions up to ₹0.12 crore.

Financial Performance and Valuation Concerns

While Servotech Renewable Power System Ltd has demonstrated robust long-term growth, with net sales expanding at an annual rate of 49.32% and operating profit growing at 46.02%, recent quarterly results have been disappointing. The company reported a sharp decline in net sales by 46.67% in the quarter ended September 2025, marking its fourth consecutive quarter of negative results. Profit before tax excluding other income fell by 104.22% to a loss of ₹0.63 crore, while profit after tax plummeted 88.2% to ₹1.33 crore. Meanwhile, interest expenses rose by 26.83% to ₹2.60 crore, exerting additional pressure on profitability.

These weak results have raised concerns about the company’s operational efficiency and financial health. Despite a return on capital employed (ROCE) of 9.8%, the stock’s valuation appears expensive, with an enterprise value to capital employed ratio of 5.9. Although the stock trades at a discount relative to its peers’ historical valuations, the price-to-earnings-to-growth (PEG) ratio stands at 6.1, indicating that the market may be pricing in limited near-term growth prospects.

Investor Sentiment and Institutional Participation

Investor sentiment has been further dampened by a decline in institutional ownership. Institutional investors reduced their stake by 1.24% in the previous quarter, now collectively holding just 1.78% of the company’s shares. Given their superior analytical capabilities and resources, this reduction signals a lack of confidence in the company’s fundamentals. This trend is consistent with the stock’s underperformance relative to the broader market; while the BSE500 index generated a 5.03% return over the past year, Servotech’s shares have lost nearly half their value.

Conclusion: Why Servotech Renew Shares Are Falling

In summary, Servotech Renewable Power System Ltd’s share price decline is primarily driven by disappointing recent quarterly results characterised by steep falls in sales and profits, rising interest costs, and a series of four consecutive negative quarters. Despite strong long-term sales and operating profit growth, the short-term financial setbacks have eroded investor confidence. The stock’s valuation metrics suggest it is expensive relative to its capital employed, and the high PEG ratio implies limited near-term growth expectations. Furthermore, the withdrawal of institutional investors and the stock’s consistent underperformance against market benchmarks have compounded the negative sentiment. These factors collectively explain the stock’s fall to new lows and its continued downward trajectory as of 01-Dec.

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