Why is Unitech Internat falling/rising?

Recent Price Movements and Market Context

Unitech International’s shares have been on a downward trajectory, losing over 10% in the past three consecutive sessions. The stock currently trades just 3.51% above its 52-week low of ₹3.85, signalling persistent pressure near its lowest levels in a year. This decline contrasts sharply with the broader market, as the Sensex has recorded modest gains over comparable periods, including a 0.02% rise in the past week and an 8.37% increase year-to-date.

Moreover, the stock has underperformed its sector by 4.75% on the latest trading day, and it remains 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 significantly, with delivery volumes on 15 Dec plunging by over 91% compared to the five-day average, suggesting reduced confidence and liquidity concerns among shareholders.

Fundamental Weaknesses Weighing on the Stock

The primary driver behind Unitech International’s share price decline is its fragile financial health. The company has not released any results in the past six months, raising concerns about transparency and operational performance. Its debt servicing capability is notably weak, with a Debt to EBITDA ratio of 7.51 times, signalling a heavy debt burden relative to earnings before interest, tax, depreciation, and amortisation.

Adding to investor unease is the company’s reported losses and negative net worth, which cast doubt on its ability to sustain operations without raising fresh capital or returning to profitability. The flat results reported for March 2025, coupled with an abysmal debtors turnover ratio of zero, further highlight operational inefficiencies and cash flow challenges.

Despite a reported 91.9% increase in profits over the past year, the stock has generated a negative return of 22.67% during the same period. This divergence suggests that market participants remain sceptical about the quality or sustainability of earnings growth, especially given the company’s negative EBITDA and risky valuation compared to historical averages.

Long-Term Underperformance and Investor Sentiment

Over the last three years, Unitech International has consistently underperformed the benchmark indices, with a cumulative return of -46.44% against the Sensex’s 38.05% gain. This persistent underperformance has eroded investor confidence, reflected in the stock’s subdued liquidity and declining trading volumes. The five-year return of -11.33% starkly contrasts with the Sensex’s robust 81.46% growth, underscoring the company’s struggles to create shareholder value over the medium term.

Given these factors, the stock is widely regarded as a strong sell by market analysts, with the risks associated with its financial position and operational performance outweighing any potential upside. Investors are advised to exercise caution and consider the company’s fundamental challenges before taking positions.

Conclusion: Why Unitech International Is Falling

In summary, Unitech International’s share price decline as of 16-Dec is primarily attributable to its weak financial fundamentals, including high debt levels, negative net worth, and lack of recent financial disclosures. The stock’s consistent underperformance relative to benchmark indices and sector peers, combined with falling investor participation and technical weakness, has compounded selling pressure. While the company has shown some profit growth, the market remains cautious due to its negative EBITDA and operational risks. Until these fundamental issues are addressed, the stock is likely to remain under pressure, making it a challenging proposition for investors seeking stable returns.

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 →