Understanding the Recent Price Movement
Despite the sharp fall on 05-Dec, Total Transport has demonstrated impressive returns over shorter time frames. The stock surged by 23.55% in the past week and gained 17.78% over the last month, significantly outperforming the Sensex, which remained nearly flat or modestly positive during these periods. This recent momentum suggests strong investor interest and confidence in the company’s prospects.
However, the year-to-date (YTD) return of 7.79% trails the Sensex’s 10.75%, and over the past year, the stock’s 4.20% gain also lags behind the benchmark’s 5.98%. More strikingly, the three-year performance shows a steep decline of 53.08%, contrasting sharply with the Sensex’s 40.03% rise. This longer-term underperformance may weigh on investor sentiment, contributing to the recent price correction.
Market Activity and Technical Indicators
On the day of the decline, Total Transport underperformed its sector by 6.46%, despite trading above all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning typically signals strength, yet the stock’s fall indicates profit-taking or short-term volatility.
Investor participation has notably increased, with delivery volumes on 04 Dec soaring by over 1300% compared to the five-day average. Such heightened activity often precedes price swings as traders adjust positions. The stock’s liquidity remains adequate for moderate trade sizes, suggesting that the price movement is not due to illiquidity but rather market dynamics.
Fast mover alert! This Large Cap from Automobiles - Passeenger just qualified for our Momentum list with stellar technical indicators. Strike while the iron is hot!
- - Recent Momentum qualifier
- - Stellar technical indicators
- - Large Cap fast mover
Fundamental Strengths Supporting the Stock
Fundamentally, Total Transport Systems Ltd presents a compelling case for investors. The company maintains a low Debt to EBITDA ratio of 1.41 times, indicating a strong capacity to service its debt obligations. This financial prudence reduces risk and supports sustainable growth.
Operating profit has expanded at an annualised rate of 73.73%, reflecting healthy long-term growth. The company has reported positive results for four consecutive quarters, with profit after tax (PAT) for the latest six months reaching ₹5.19 crores, an extraordinary growth of 2,783.33%. Similarly, profit before tax excluding other income (PBT less OI) for the quarter stood at ₹2.90 crores, growing by 514.29%. These figures underscore the company’s improving profitability and operational efficiency.
Return on capital employed (ROCE) is robust at 16.1%, with the half-year figure peaking at 15.19%. This level of capital efficiency, combined with an enterprise value to capital employed ratio of 1.4, suggests the stock is attractively valued relative to its peers. Despite this, the stock trades at a discount compared to historical valuations of similar companies, potentially offering upside for value-oriented investors.
Holding Total Transport from Transport Services? See if there's a smarter choice! SwitchER compares it with peers and suggests superior options across market caps and sectors!
- - Peer comparison ready
- - Superior options identified
- - Cross market-cap analysis
Balancing Positives with Market Realities
While the company’s fundamentals are strong, the stock’s recent underperformance relative to the broader market over longer periods and the sharp price drop on 05-Dec highlight the volatility investors face. The majority of shareholders are non-institutional, which can sometimes lead to more pronounced price swings due to retail trading patterns.
Moreover, the stock’s three-year decline of over 50% compared to the Sensex’s substantial gains may temper enthusiasm among cautious investors. The recent surge in delivery volumes could indicate speculative trading or repositioning ahead of anticipated news or market events, contributing to the price correction despite positive earnings trends.
In summary, Total Transport Systems Ltd’s share price fall on 05-Dec appears to be a short-term market reaction amid strong underlying financial health and growth prospects. Investors should weigh the company’s impressive profitability and valuation metrics against recent volatility and historical performance trends when considering their positions.
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 →
