Why is Themis Medicare falling/rising?

Persistent Downtrend and Market Underperformance

Themis Medicare’s stock has been on a downward trajectory for the past week, losing 7.15% compared to a modest 0.79% gain in the Sensex over the same period. The decline extends over the last month as well, with the stock falling 14.16% while the Sensex rose by nearly 1%. Year-to-date figures reveal a stark contrast, with Themis Medicare plunging 58.77% against the Sensex’s 9.08% gain. Over the last year, the stock has underperformed dramatically, dropping 62.27% while the benchmark index advanced by 10.47%. Even over a three-year horizon, the company’s 21.77% return trails the Sensex’s 39.39% growth, signalling sustained underperformance.

On the day in question, the stock underperformed its sector by 2.91%, hitting an intraday low of Rs 108.50. It is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating a bearish technical setup. Investor participation has also waned, with delivery volumes on 20 Nov falling by 47.09% compared to the five-day average, suggesting reduced buying interest and liquidity concerns despite the stock’s ability to support trades of modest size.

Financial Performance and Profitability Concerns

Themis Medicare’s financial health is a key factor behind the stock’s decline. Despite a relatively strong ability to service debt, with a low Debt to EBITDA ratio of 0.86 times, the company’s operating profit has deteriorated sharply. Over the past five years, operating profit has contracted at an alarming annual rate of -189.22%, signalling severe operational challenges.

The company has reported negative results for four consecutive quarters. Its Profit Before Tax excluding other income (PBT LESS OI) for the latest quarter stood at a loss of Rs 6.69 crore, a decline of 152.0% compared to the previous four-quarter average. Similarly, the net profit after tax (PAT) was negative Rs 3.62 crore, down 59.6% from the prior average. The return on capital employed (ROCE) for the half-year period is also deeply negative at -3.47%, underscoring the company’s inability to generate adequate returns on invested capital.

Adding to the risk profile, Themis Medicare is currently experiencing negative EBITDA, which raises concerns about its operational sustainability. Over the past year, the stock’s return of -62.27% has been accompanied by a 150.9% decline in profits, highlighting the disconnect between market valuation and deteriorating fundamentals.

Market Sentiment and Institutional Interest

Investor sentiment towards Themis Medicare remains subdued. Despite the company’s size, domestic mutual funds hold no stake in the stock. This absence of institutional backing may reflect a lack of confidence in the company’s current valuation or business prospects. The stock’s poor performance relative to the broader market and sector indices further dampens enthusiasm among investors.

Conclusion: A Stock Under Pressure Amid Weak Fundamentals

Themis Medicare’s share price decline on 21-Nov is a reflection of its ongoing financial difficulties and poor market performance. The company’s negative earnings trend, weak profitability metrics, and lack of institutional support have contributed to sustained selling pressure. Trading below all major moving averages and experiencing falling investor participation, the stock faces significant headwinds in the near term.

While the company’s low debt servicing ratio offers some respite, the steep contraction in operating profits and persistent losses highlight fundamental challenges that investors must carefully consider. Themis Medicare’s underperformance relative to the Sensex and sector indices over multiple time frames further emphasises the risks associated with the stock at present.

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