Why is Vardhman Textile falling/rising?

Recent Price Movement and Market Performance

The stock has been on a downward trajectory for the past three consecutive days, cumulatively losing 8.77% in returns during this period. This decline is sharper than the sector average, with the stock underperforming its peers by 1.7% on the day. Intraday, the share price touched a low of ₹424.5, marking a 2.55% drop. Furthermore, Vardhman Textile is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish technical outlook.

Investor participation has also waned, as evidenced by a 9.2% decrease in delivery volume on 24 Nov compared to the five-day average, indicating reduced buying interest. Despite this, liquidity remains adequate, with the stock capable of handling trade sizes of approximately ₹0.22 crore based on 2% of the five-day average traded value.

Fundamental Analysis and Valuation

Despite the recent price weakness, Vardhman Textile maintains some positive fundamental attributes. The company boasts a very low average debt-to-equity ratio of 0.01 times, reflecting a conservative capital structure. Operating profit has demonstrated healthy long-term growth, expanding at an annual rate of 29.91%. The return on equity (ROE) stands at 8.3%, and the stock trades at a price-to-book value of 1.2, suggesting a fair valuation. However, it is important to note that the stock is priced at a premium relative to its peers’ historical averages.

Over the past year, the company’s profits have increased by 5.8%, yet the stock has generated a negative return of 6.56%, resulting in a price/earnings-to-growth (PEG) ratio of 2.5. Institutional investors hold a significant 22.19% stake, indicating confidence from knowledgeable market participants who typically conduct thorough fundamental analysis.

Weak Quarterly Results and Underperformance

The primary catalyst behind the recent decline appears to be the company’s flat quarterly results reported in September 2025. The profit after tax (PAT) for the quarter stood at ₹187.03 crore, marking a 12.2% decrease compared to the average of the previous four quarters. Earnings per share (EPS) also hit a low of ₹6.57, underscoring the subdued profitability in the near term.

In addition to the disappointing quarterly performance, Vardhman Textile has underperformed key market indices over multiple time horizons. The stock’s returns lag behind the BSE500 index over the last three years, one year, and three months. Year-to-date, the stock has declined by 16.58%, while the Sensex has gained 8.25%. Similarly, over the past year, the stock’s negative 6.56% return contrasts with the Sensex’s positive 5.59% gain. Even over three years, the stock’s 24.41% appreciation trails the Sensex’s 35.79% rise.

Conclusion: Why the Stock is Falling

In summary, Vardhman Textile’s recent share price decline is primarily driven by weak quarterly earnings and sustained underperformance relative to broader market indices and sector peers. The flat PAT and reduced EPS in the latest quarter have raised concerns about near-term profitability. Coupled with the stock trading below all major moving averages and declining investor participation, the technical and fundamental signals point towards a bearish sentiment among investors.

While the company’s low debt levels and long-term operating profit growth provide some support, the premium valuation and negative returns over the past year and beyond have weighed on investor confidence. The stock’s inability to keep pace with benchmark indices such as the Sensex and BSE500 further compounds the cautious outlook.

Investors should carefully weigh these factors before considering exposure to Vardhman Textile, especially given the availability of potentially better options within the garments and apparel sector and other segments.

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