Why is Sindhu Trade falling/rising?

Recent Price Performance and Market Comparison

Over the last week, Sindhu Trade’s stock has underperformed significantly, falling by 4.55% while the Sensex gained 0.79%. The one-month decline is even more pronounced at 9.79%, contrasting with the Sensex’s modest 0.95% rise. Year-to-date, the stock has delivered a positive return of 3.56%, but this pales in comparison to the Sensex’s 9.08% gain. Over longer horizons, the stock’s returns remain below benchmark indices, with a 1-year return of 2.90% versus Sensex’s 10.47%, and a 3-year return of 20.96% against 39.39% for the Sensex. Despite an impressive 5-year return of 1417.16%, this appears to be an outlier amid recent underperformance.

Technical Indicators and Trading Activity

Technical analysis reveals that Sindhu Trade is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling sustained bearish pressure. The stock has been declining for three consecutive days, losing 3.32% in that period. Additionally, investor participation is waning, with delivery volume on 20 Nov dropping by nearly 47% compared to the five-day average. This reduced trading activity suggests diminishing interest from market participants, which often exacerbates price declines. Although liquidity remains adequate for small trade sizes, the lack of robust buying interest is a concern.

Fundamental Weaknesses Driving the Decline

At the core of Sindhu Trade’s recent price weakness lies its deteriorating financial health. The company has reported operating losses, with operating profit declining at an annualised rate of 16.52%, indicating poor long-term growth prospects. The latest quarterly results for September 2025 were particularly disappointing, showing a 37.17% fall in net profit. This marks the third consecutive quarter of negative results, underscoring persistent operational challenges.

The quarterly profit after tax (PAT) stood at ₹10.82 crore, down 37.2% compared to the previous four-quarter average. Return on capital employed (ROCE) is at a low 2.21%, reflecting inefficient use of capital. Meanwhile, interest expenses have surged by 29.48% to ₹12.43 crore, further pressuring profitability. The company’s return on equity (ROE) is negative at -2.3, signalling losses relative to shareholder equity.

Valuation Concerns and Investor Sentiment

Despite these weak fundamentals, Sindhu Trade’s stock trades at a price-to-book value of 2.1, which is expensive relative to its peers and historical averages. This premium valuation is difficult to justify given the company’s declining profits and negative returns on equity. Over the past year, while the stock has generated a modest 2.90% return, its profits have fallen by 120.6%, highlighting a disconnect between price and earnings performance.

Investor sentiment appears cautious, as reflected in the recent underperformance relative to the sector and benchmark indices. The stock’s inability to sustain gains and the consistent fall in price over recent days suggest that market participants are factoring in the company’s weak earnings trajectory and elevated financial risks.

Institutional Participation Offers Limited Support

On a more positive note, institutional investors have marginally increased their stake by 0.77% over the previous quarter, now holding 2.93% of the company. Institutional involvement often brings more rigorous fundamental analysis and longer-term investment horizons. However, this modest increase has not been sufficient to offset the broader negative sentiment and operational challenges faced by Sindhu Trade.

Conclusion: Why the Stock is Falling

In summary, Sindhu Trade Links Ltd’s stock decline as of 21-Nov is primarily driven by weak financial results, including consecutive quarterly losses, declining profitability, and rising interest costs. The stock’s technical indicators confirm bearish momentum, with prices below all major moving averages and falling trading volumes. Despite some institutional buying, the company’s expensive valuation relative to its deteriorating fundamentals has led to cautious investor sentiment and sustained selling pressure. Until the company demonstrates a clear turnaround in earnings and operational efficiency, the stock is likely to remain under pressure.

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 →