Why is Thirumalai Chem. falling/rising?

Recent Price Movement and Market Context

Thirumalai Chemicals has experienced a notable rally over the past week, gaining 9.5%, significantly outperforming the Sensex’s modest 0.13% rise during the same period. This marks the fifth consecutive day of gains for the stock, reflecting a short-term resurgence in investor interest. However, this positive momentum contrasts with the stock’s broader performance, which has been disappointing over longer horizons. The stock has declined by 7.88% over the past month and has suffered a steep 25.89% loss year-to-date, while the Sensex has advanced by 9.05% in the same timeframe.

Despite the recent gains, the stock remains below its 20-day, 50-day, 100-day, and 200-day moving averages, indicating that the rally has yet to translate into a sustained recovery in technical terms. The intraday low of ₹228.25 on 15-Dec also highlights some volatility within the trading session.

Investor Participation and Liquidity

One of the key drivers behind the recent price rise appears to be increased investor participation. Delivery volumes surged to 2.67 lakh shares on 12-Dec, more than doubling the five-day average delivery volume by 106.19%. This heightened activity suggests renewed buying interest, possibly from retail investors or non-institutional shareholders, who remain the majority holders of the stock. The stock’s liquidity remains adequate, supporting trades of up to ₹0.21 crore based on 2% of the five-day average traded value, which facilitates smoother price discovery and market activity.

Fundamental Challenges Weighing on the Stock

Despite the recent uptick, Thirumalai Chemicals faces significant fundamental headwinds that have contributed to its prolonged underperformance. Over the past five years, the company’s operating profit has contracted at an alarming annual rate of -276.45%, signalling severe operational difficulties. The latest quarterly results, declared in September 2025, were notably weak, with net sales declining by 1.04% and the company reporting negative earnings for four consecutive quarters.

The financial strain is further underscored by a sharp increase in interest expenses, which have risen by 48.24% to ₹43.91 crore over the last six months. Profit before tax excluding other income has plunged by 53.8% compared to the previous four-quarter average, standing at a loss of ₹52.16 crore. Similarly, the net profit after tax has deteriorated by 20.1%, registering a loss of ₹33.38 crore in the latest quarter. These figures highlight the company’s ongoing struggles to generate positive earnings and maintain profitability.

Moreover, the stock’s risk profile remains elevated due to negative EBITDA and valuations that are considered risky relative to historical averages. Over the past year, the stock has delivered a negative return of 35.77%, while profits have plummeted by 346.6%, reflecting a challenging operating environment and investor scepticism.

Long-Term Underperformance and Market Position

Thirumalai Chemicals has also lagged behind broader market indices and sector benchmarks over multiple timeframes. While it has posted a 15.31% return over three years, this pales in comparison to the Sensex’s 37.89% gain. The stock’s five-year return of 123.58% exceeds the Sensex’s 84.19%, but this longer-term outperformance is overshadowed by recent negative trends and deteriorating fundamentals. The company’s inability to sustain growth and profitability has led to underperformance relative to the BSE500 index over the last three years, one year, and three months.

Conclusion: Why the Stock Is Rising Despite Weak Fundamentals

The recent rise in Thirumalai Chemicals’ share price appears to be driven primarily by short-term market dynamics rather than a fundamental turnaround. Increased investor participation and a series of consecutive daily gains have boosted the stock by 9.5% over the past week, outpacing sector performance. However, the company’s financial results remain weak, with sustained losses, rising interest costs, and declining profitability casting a shadow over its outlook.

Investors should weigh the stock’s recent price strength against its poor earnings trajectory and elevated risk profile. While liquidity and trading volumes support active market engagement, the underlying business challenges suggest caution. The stock’s long-term underperformance relative to benchmarks and negative operating metrics indicate that the recent rally may be a technical rebound rather than a signal of fundamental recovery.

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