Why is Waaree Renewab. falling/rising?

Recent Price Movement and Market Context

Waaree Renewable Technologies has experienced a notable downward trend over recent weeks. The stock has declined by 3.37% over the past week, underperforming the broader Sensex index which fell by only 0.59% in the same period. This negative momentum extends over the last month, with the stock shedding 15.67%, while the Sensex gained 1.34%. Year-to-date, the stock is down 22.40%, contrasting sharply with the Sensex’s 8.92% rise. Over the last year, the stock’s decline deepens to 28.92%, whereas the benchmark index advanced by 5.27%. These figures highlight a significant divergence between Waaree Renewable Technologies and the broader market indices.

Despite the recent weakness, it is important to note the stock’s impressive long-term performance. Over three years, the company’s shares have surged by an extraordinary 939.92%, vastly outperforming the Sensex’s 35.37% gain. Even more striking is the five-year return of 34,633.33%, dwarfing the benchmark’s 90.68%. This long-term outperformance underscores the company’s strong growth trajectory and investor confidence over extended periods.

Technical and Trading Dynamics

On the technical front, the stock currently trades above its 200-day moving average, signalling a long-term positive trend. However, it remains below its shorter-term moving averages including the 5-day, 20-day, 50-day, and 100-day averages, indicating recent selling pressure and a potential short-term correction. The stock has been on a consecutive five-day losing streak, reflecting cautious investor sentiment in the near term.

Investor participation has also waned, with delivery volumes on 02 Dec falling by 8.71% compared to the five-day average, suggesting reduced buying interest. Nevertheless, liquidity remains adequate, supporting trade sizes of approximately ₹0.58 crore based on 2% of the five-day average traded value. This liquidity ensures that the stock remains accessible for active trading despite the recent decline.

Fundamental Strengths Supporting the Stock

Despite the recent price softness, Waaree Renewable Technologies continues to exhibit strong fundamental metrics that justify a hold stance for investors. The company maintains a low Debt to EBITDA ratio of 0.54 times, indicating a solid capacity to service its debt obligations without undue financial strain. This conservative leverage profile is a positive sign for long-term stability.

Financial growth remains robust, with net sales expanding at an annualised rate of 247.04% and operating profit growing by 212.28%. Such rapid expansion in core business metrics reflects the company’s successful scaling and operational efficiency. Net profit growth of 117.38% further reinforces the company’s profitability trajectory.

Waaree Renewable Technologies has consistently delivered positive quarterly results, with 17 consecutive quarters of profit growth. The latest quarterly figures show Profit Before Tax excluding other income at ₹152.13 crore, growing at 130.85%, while Profit After Tax stands at ₹116.30 crore, up 117.2%. Additionally, the company’s cash and cash equivalents reached a record high of ₹1,945.60 crore in the half-year period, providing a strong liquidity cushion.

Balancing Short-Term Price Pressure with Long-Term Potential

The recent decline in Waaree Renewable Technologies’ share price appears to be driven primarily by short-term market dynamics rather than fundamental weaknesses. The stock’s underperformance relative to the Sensex and its own moving averages suggests profit-taking or cautious positioning by investors amid broader market volatility. Reduced delivery volumes indicate a temporary dip in investor enthusiasm, which may be influenced by sector rotation or external macroeconomic factors.

However, the company’s strong financial health, consistent profit growth, and substantial cash reserves provide a solid foundation for future performance. Investors with a long-term horizon may view the current price weakness as an opportunity to accumulate shares in a fundamentally sound renewable energy player. The stock’s impressive multi-year returns further support this perspective, highlighting its capacity to generate significant wealth over time despite interim fluctuations.

In conclusion, while Waaree Renewable Technologies Ltd is experiencing a short-term price correction as of 03-Dec, its robust earnings growth, prudent debt management, and strong cash position underpin its long-term investment appeal. Market participants should weigh these factors carefully when considering their exposure to this stock in the renewable energy sector.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →