Why is Thacker & Co. falling/rising?

Recent Price Movement and Market Context

Thacker & Company’s stock has gained 5.04% over the past week, significantly outperforming the Sensex, which declined by 0.40% in the same period. The stock has also recorded a consecutive four-day gain, accumulating a 6.96% return during this stretch. On 19-Dec, the stock touched an intraday high of Rs 1,450, reflecting strong buying interest despite subdued investor participation, as delivery volumes on 18-Dec fell by 36.84% compared to the five-day average. The share price currently trades above its five-day moving average but remains below longer-term averages such as the 20-day, 50-day, 100-day, and 200-day moving averages, indicating some short-term momentum amid a broader cautious trend.

Fundamental Challenges Tempering Long-Term Outlook

Despite the recent price appreciation, Thacker & Company faces significant headwinds in its fundamental performance. Over the last five years, the company’s net sales have declined at an annualised rate of 2.34%, signalling weak top-line growth. The latest quarterly results for September 2025 further underscore this trend, with profit after tax (PAT) falling by 18.2% to Rs 4.54 crore compared to the average of the previous four quarters. Additionally, cash and cash equivalents at half-year stood at a low Rs 0.57 crore, raising concerns about liquidity and operational flexibility.

The company’s return on equity (ROE) stands at 11.4%, which, while respectable, is accompanied by a high valuation multiple. The stock trades at a price-to-book value of 0.9, indicating a premium relative to its peers’ historical averages. This valuation premium appears at odds with the company’s recent profit decline of 8.8% over the past year and its underperformance relative to the broader market. While the BSE500 index has delivered a 3.86% return in the last year, Thacker & Company’s shares have depreciated by 26.02%, reflecting investor scepticism about its near-term prospects.

Market Position and Shareholder Structure

On a positive note, the company maintains a low debt-to-equity ratio, effectively zero, which reduces financial risk and may appeal to risk-averse investors. The majority shareholding remains with promoters, suggesting stable ownership and potential alignment with shareholder interests. However, these factors have not been sufficient to offset concerns about the company’s stagnant sales and declining profitability in the eyes of many market participants.

Investor Sentiment and Trading Dynamics

The recent price rise can be attributed to short-term trading momentum and sector outperformance. The stock outperformed its sector by 2.99% on the day, suggesting selective buying interest possibly driven by technical factors or speculative positioning. However, the decline in delivery volumes indicates that fewer investors are holding shares for the long term, which may limit the sustainability of the rally. Liquidity remains adequate for trading, but the absence of strong volume support could lead to volatility in coming sessions.

In summary, while Thacker & Company’s shares have risen sharply on 19-Dec, this movement contrasts with the company’s weak sales growth, declining profits, and expensive valuation relative to peers. The stock’s recent gains appear to be driven more by short-term market dynamics and technical factors rather than a fundamental turnaround. Investors should weigh these mixed signals carefully when considering exposure to this stock.

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 →