Why is Solid Stone Company Ltd falling/rising?

Recent Price Movements and Market Behaviour

The stock has been under pressure in recent sessions, registering a consecutive three-day fall that culminated in a 7.13% loss over this period. On 12-Jan, it opened sharply lower with an 11.53% gap down, hitting a new 52-week low of ₹25.56 during intraday trading. The share price fluctuated within a wide range of ₹3.32, accompanied by high volatility measured at 6.1% intraday. Notably, the weighted average price indicates that a larger volume of shares traded closer to the day’s low, signalling selling pressure. Furthermore, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, underscoring a bearish technical outlook.

Comparative Performance Against Benchmarks

Solid Stone’s recent returns have lagged considerably behind the broader market indices. Over the past week, the stock declined by 2.07%, slightly worse than the Sensex’s 1.83% fall. The underperformance is more pronounced over longer periods: a 9.27% drop in the last month compared to a 1.63% decline in the Sensex, and a year-to-date loss of 5.21% against the Sensex’s 1.58% fall. Over the past year, the stock has plummeted 16.70%, while the Sensex has gained 8.40%. The disparity widens further over three and five years, with Solid Stone falling 30.23% and 54.79% respectively, in stark contrast to the Sensex’s robust gains of 39.89% and 69.39% over the same periods. This consistent underperformance highlights structural challenges facing the company.

Fundamental Weaknesses Weighing on the Stock

Solid Stone’s financial fundamentals reveal several areas of concern that have contributed to the negative sentiment. The company’s Return on Capital Employed (ROCE) stands at a modest 6.77%, reflecting weak long-term profitability. Net sales growth has been sluggish, averaging just 3.05% annually over the past five years, indicating limited expansion. Additionally, the company’s ability to service debt is strained, with a high Debt to EBITDA ratio of 5.37 times, suggesting elevated financial risk. The latest quarterly results for September 2025 showed flat performance, with net sales declining by 13.4% compared to the previous four-quarter average, and a low half-year ROCE of 7.21%. These factors collectively point to a lack of operational momentum and profitability challenges.

Valuation and Shareholder Structure

Despite these challenges, the stock trades at an attractive valuation, with an enterprise value to capital employed ratio of 0.8, indicating it is priced at a discount relative to its peers’ historical averages. However, this valuation advantage has not translated into positive returns, as the company’s profits have fallen by 19% over the past year. The majority ownership remains with promoters, which may provide some stability but has not prevented the stock’s decline.

Conclusion: Why the Stock is Falling

The decline in Solid Stone Company Ltd’s share price on 12-Jan is primarily driven by its weak financial performance, persistent underperformance relative to market benchmarks, and negative technical indicators. The company’s poor profitability metrics, sluggish sales growth, and high leverage have eroded investor confidence. The recent quarterly results failed to inspire optimism, with declining sales and low returns on capital. These fundamental weaknesses, combined with increased volatility and selling pressure, have resulted in the stock hitting new lows and trading below all major moving averages. While the valuation appears attractive, it has not been sufficient to offset concerns about the company’s growth prospects and financial health, leading to sustained selling and a negative market sentiment.

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 →