Why is Shankara Building Products Ltd falling/rising?

Intraday Volatility and Market Sentiment

On the trading day, the stock exhibited significant volatility, swinging between an intraday high of Rs 130.4 and a low of Rs 105.5, marking a wide range of Rs 24.9. Despite touching a modest intraday gain of 2.92%, the stock ultimately succumbed to selling pressure, closing near its low point. The weighted average price indicates that a greater volume of shares exchanged hands closer to the lower price levels, signalling bearish sentiment among traders. Furthermore, the stock underperformed its sector by 12.62% on the day, highlighting relative weakness within its industry peers.

Adding to the negative tone, Shankara Building Products is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning often signals a downtrend and may deter momentum-driven investors from entering positions. Investor participation also declined, with delivery volumes on 08 January falling by over 55% compared to the five-day average, suggesting reduced conviction among shareholders.

Fundamental Challenges and Financial Performance

Despite some positive attributes such as a low Debt to EBITDA ratio of 0.79 times and a return on capital employed (ROCE) of 17.1%, the company’s recent financial performance has been disappointing. The latest quarterly results, declared in September 2025, revealed a sharp decline in net sales by 17.01%, with net sales falling to Rs 279.91 crore—the lowest recorded in recent periods. Operating profitability also deteriorated, with PBDIT turning negative at Rs -0.58 crore. Most notably, the company reported a net loss after tax (PAT) of Rs -5.16 crore, representing a staggering 700% decline compared to previous quarters.

These weak results have weighed heavily on investor sentiment, as reflected in the stock’s 29.34% negative return over the past year, starkly contrasting with the Sensex’s 7.67% gain during the same period. Over three years, the stock has underperformed the benchmark by over 30%, while the Sensex has delivered a robust 37.58% return. This persistent underperformance underscores concerns about the company’s growth prospects and operational efficiency.

Long-term growth metrics also paint a cautious picture. Over the last five years, net sales have grown at a modest annual rate of 10.82%, while operating profit has increased by 14.50% annually. These figures suggest that the company’s expansion and profitability improvements have been relatively subdued, especially when compared to broader market indices and sector peers.

Valuation and Institutional Interest

On the valuation front, Shankara Building Products trades at a discount relative to its peers, with an enterprise value to capital employed ratio of 0.6, which may appeal to value-oriented investors. The company’s PEG ratio stands at zero, reflecting the recent profit decline and lack of earnings growth. Institutional investors hold a significant 22.45% stake in the company, and their shareholding has increased by 1.83% over the previous quarter, indicating some confidence in the company’s fundamentals despite recent setbacks.

Conclusion: Why the Stock is Falling

The sharp decline in Shankara Building Products Ltd’s share price on 09 January is primarily attributable to its disappointing quarterly results, which revealed significant declines in sales, profitability, and net income. This financial weakness, coupled with the stock’s consistent underperformance against major benchmarks over the past three years, has eroded investor confidence. Technical indicators further reinforce the bearish outlook, with the stock trading below all major moving averages and experiencing reduced investor participation.

While the company maintains a strong balance sheet with manageable debt levels and attractive valuation metrics, these positives have not been sufficient to offset concerns about its poor recent earnings performance and subdued long-term growth. The combination of these factors has led to heightened volatility and selling pressure, resulting in the notable share price fall observed.

Investors should carefully weigh these fundamental and technical signals before considering exposure to Shankara Building Products, especially given the availability of alternative investment opportunities within the building products sector and beyond.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →