Recent Price Performance and Market Comparison
Veedol Corporation Ltd has underperformed relative to the broader market and its sector peers over multiple time frames. In the past week, the stock has declined by 3.76%, compared to a 2.55% drop in the Sensex. Year-to-date, the stock is down 3.60%, while the Sensex has fallen by 1.93%. Over the last year, the stock’s return stands at -7.96%, contrasting sharply with the Sensex’s positive 7.67% gain. However, the longer-term performance remains robust, with the stock delivering a 57.80% return over three years and 74.38% over five years, both exceeding the Sensex’s respective returns of 37.58% and 71.32%.
Despite this strong historical performance, the recent price action indicates a period of weakness. The stock has been on a consecutive five-day losing streak, shedding 3.76% during this span. It is currently 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 in the short term.
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Investor Participation and Liquidity
Investor engagement appears to be waning, as evidenced by a decline in delivery volume. On 08 Jan, the delivery volume stood at 4.17 thousand shares, down 8.59% from the five-day average. This reduction in investor participation may be contributing to the stock’s recent price softness. Nevertheless, liquidity remains adequate for trading, with the stock’s average traded value supporting trade sizes of approximately ₹0.02 crore, ensuring that investors can transact without significant market impact.
Fundamental Strengths Supporting the Stock
Despite the recent price decline, Veedol Corporation Ltd’s fundamentals remain solid. The company boasts a zero average debt-to-equity ratio, indicating a clean balance sheet with no reliance on debt financing. Profitability metrics are strong, with the latest six months’ PAT reaching ₹90.61 crore, reflecting a growth rate of 26.36%. The company’s return on capital employed (ROCE) for the half-year is an impressive 23.45%, while profit before tax excluding other income (PBT less OI) for the quarter has grown by 20.40% to ₹51.41 crore.
Return on equity (ROE) stands at a healthy 19.9%, and the stock trades at a price-to-book value of 2.8, which is considered attractive relative to its peers’ historical valuations. Notably, the company’s profits have increased by 31% over the past year, even as the stock price has declined by nearly 8%. This disparity is reflected in a low PEG ratio of 0.5, suggesting that the stock may be undervalued based on its earnings growth potential. Additionally, the stock offers a high dividend yield of approximately 3.6%, providing income-oriented investors with an appealing return component.
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Promoter Confidence and Outlook
One of the most encouraging signs for Veedol Corporation Ltd is the rising confidence among its promoters. Over the previous quarter, promoters have increased their stake by 2.23%, now holding a commanding 64.58% of the company’s equity. This increase in promoter shareholding is often interpreted as a strong vote of confidence in the company’s future prospects and strategic direction.
While the stock’s recent price decline may be disappointing to investors, it appears to be driven more by short-term market dynamics and reduced investor participation rather than any fundamental weakness. The company’s consistent profitability growth, strong returns on capital, attractive valuation metrics, and high dividend yield provide a solid foundation for potential recovery. Investors may view the current dip as an opportunity to accumulate shares at a reasonable price, especially given the long-term outperformance relative to the benchmark indices.
In summary, Veedol Corporation Ltd’s stock is falling as of 09-Jan primarily due to short-term technical pressures, underperformance relative to the Sensex, and declining investor participation. However, the company’s robust financial health, rising promoter stake, and attractive valuation suggest that the recent weakness could be temporary, offering a compelling case for investors to hold or consider adding to their positions.
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