Recent Price Movement and Market Performance
On 15 December, Servotech Renewable Power System Ltd’s shares closed at ₹80.17, down by ₹2.58 or 3.12% from the previous session. This decline places the stock perilously close to its 52-week low of ₹79, just 1.46% away, signalling sustained downward pressure. The stock has underperformed its sector by 2.86% on the day and is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating a bearish technical outlook.
Over the past week, the stock has declined by 1.18%, contrasting with the Sensex’s modest gain of 0.26%. The monthly performance is even more concerning, with a steep 21.30% drop against the Sensex’s 0.45% rise. Year-to-date, Servotech Renew has plummeted 51.89%, while the Sensex has advanced by over 10%. The one-year return is similarly negative at -54.50%, starkly underperforming the Sensex’s 5.08% gain. These figures highlight the stock’s persistent weakness relative to the broader market.
Financial Results Weighing on Sentiment
The primary catalyst behind the stock’s decline is the company’s very negative quarterly results declared in September 2025. Servotech Renewable Power System Ltd reported a sharp 46.67% fall in net sales, marking the fourth consecutive quarter of negative results. Profit after tax (PAT) for the quarter stood at ₹1.33 crore, plunging 88.2% compared to the previous period. Operating profit to interest ratio has deteriorated to a low of 2.42 times, while PBDIT has dropped to ₹6.28 crore, the lowest in recent quarters. These figures underscore operational challenges and margin pressures that have unsettled investors.
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Valuation and Institutional Investor Sentiment
Despite the recent setbacks, the company’s long-term fundamentals show healthy growth, with net sales expanding at an annual rate of 49.32% and operating profit growing at 46.01%. However, the return on capital employed (ROCE) stands at 9.8%, and the enterprise value to capital employed ratio is 5.3, suggesting the stock remains relatively expensive. The price-to-earnings-growth (PEG) ratio of 5.4 further indicates that the stock’s valuation may not be justified by its earnings growth prospects.
Adding to the bearish sentiment, institutional investors have reduced their stake by 1.24% over the previous quarter, now collectively holding only 1.78% of the company. Given their superior analytical resources, this decline in institutional participation signals a lack of confidence in the company’s near-term outlook. Retail investors may also be cautious, as evidenced by a 48.16% drop in delivery volume on 12 December compared to the five-day average, reflecting falling investor participation.
Market Underperformance and Liquidity
Servotech Renew’s underperformance extends beyond price returns. While the broader BSE500 index has generated a modest 1.32% return over the past year, the stock has delivered a negative 54.50% return. This divergence highlights the stock’s struggles to keep pace with market and sector benchmarks. Liquidity remains adequate, with the stock’s traded value supporting a trade size of approximately ₹0.14 crore based on 2% of the five-day average traded value, but this has not been sufficient to attract sustained buying interest.
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Conclusion: Why Servotech Renew Is Falling
The decline in Servotech Renewable Power System Ltd’s share price as of 15 December is primarily driven by disappointing quarterly financial results, including a significant drop in net sales and profits, which have raised concerns about the company’s operational health. The stock’s technical weakness, trading below all major moving averages and near its 52-week low, compounds negative sentiment. Furthermore, the reduction in institutional investor holdings and falling delivery volumes indicate diminished confidence among sophisticated market participants. Although the company has demonstrated strong long-term growth, its recent performance and valuation metrics suggest caution for investors. This combination of weak fundamentals, poor recent earnings, and subdued market participation explains the ongoing downward pressure on Servotech Renew’s stock price.
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