Robust Quarterly Performance Drives Momentum
The sharp rise in Tarmat’s share price on 13-Jan can be primarily attributed to the company’s very positive quarterly results declared in September 2025. The firm reported a remarkable net profit growth of 256.1%, signalling a strong operational turnaround. This performance is further supported by a 45.60% increase in quarterly net sales, which reached ₹22.67 crores, underscoring expanding business activity and improving revenue streams.
Additionally, the company’s cash and cash equivalents stood at a record high of ₹12.75 crores for the half-year period, reflecting enhanced liquidity and financial stability. The debtors turnover ratio also improved to 13.86 times, indicating efficient receivables management and better cash flow generation. These fundamental improvements have evidently bolstered investor confidence, contributing to the stock’s upward trajectory.
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Technical Indicators and Market Sentiment
From a technical perspective, Tarmat is trading above all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day marks, signalling a bullish trend. The stock also experienced high intraday volatility of 5.68%, with a wide trading range of ₹8.45, reflecting active trading and heightened investor interest. Notably, delivery volumes on 12-Jan surged by 111.17% compared to the five-day average, indicating rising participation from long-term investors and traders alike.
Despite the weighted average price suggesting more volume traded near the lower price levels, the overall price action and volume dynamics point to a strong recovery and renewed buying enthusiasm. The stock’s liquidity remains adequate, supporting sizeable trade volumes without significant price disruption.
Long-Term Challenges Temper Optimism
However, it is important to contextualise this rally within the company’s broader financial health. Over the past five years, Tarmat has experienced a negative compound annual growth rate (CAGR) of -29.77% in operating profits, highlighting persistent long-term operational challenges. The company’s ability to service debt remains weak, with an average EBIT to interest ratio of just 1.88, raising concerns about financial leverage and risk.
Profitability metrics also remain subdued, with an average return on equity (ROE) of 3.63%, and a recent ROE of 1.9%, indicating limited returns generated on shareholders’ funds. Valuation-wise, the stock trades at a price-to-book value of 0.9, which, while representing a discount to peers, suggests the market is cautious given the company’s fundamentals. Over the last year, the stock has declined by 13.94%, underperforming the Sensex and BSE500 indices, despite a 126.7% rise in profits, resulting in a low PEG ratio of 0.5 that may attract value investors.
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Performance Relative to Benchmarks
In the short term, Tarmat has outperformed the Sensex significantly, gaining 9.83% in the past week compared to the benchmark’s decline of 1.69%. Year-to-date, the stock is up 8.24%, while the Sensex has fallen by 1.87%. This recent outperformance contrasts with the longer-term trend, where the stock has lagged behind, delivering a modest 0.74% return over three years against the Sensex’s 38.78% gain, and a negative 7.33% over five years versus the benchmark’s 68.97% rise.
Such disparity suggests that while the company is currently benefiting from improved operational results and investor interest, structural issues and historical underperformance continue to weigh on its valuation and investor sentiment.
Conclusion
Tarmat Ltd’s sharp price rise on 13-Jan is driven by a combination of strong quarterly earnings growth, improved sales, and enhanced liquidity, which have reignited investor confidence and led to increased trading volumes and positive technical signals. Nevertheless, the company’s weak long-term fundamentals, modest profitability, and debt servicing challenges remain key concerns that temper the enthusiasm around the stock. Investors should weigh the recent positive momentum against these underlying risks when considering exposure to Tarmat Ltd.
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