No company is always good every year. They fluctuate according to market conditions.
Take the example of Paytm or Zomato.
Zomato sees bumper listing as retail investors hike subscription numbers during its time Initial Public Offering (IPO).
In the next few months, the market capitalization of the loss-making company that burns cash every year was at a peak of Rs 1.4 trillion (tn).
other fundamentally strong stock Like Jubilant etc, which made huge profits, were trading at half the valuation of Zomato.
For Paytm shareholders, there is no respite since the listing as the stock is down a whopping 70%.
Now, as pessimistic as it sounds, it is possible that Nureka may turn out to be another Paytm-like debacle in the near future. At least the market is predicting it with similar volatility in the share price.
Nureca’s share price is down 72% so far in 2022.
When the company launched its IPO last year, there was enthusiastic participation from investors, leading to a 59% gain on the day of listing.
The healthcare and wellness products distributor listed at Rs 635 against its issue price of Rs 400. The issue was oversubscribed 39.9 times with retail category leading charge (166.7x).
Jump ahead to the present and shares are trading near 52-week lows, falling each trading session.
Let us find out why Nureca shares are falling.
Why is Neureka stock falling?
#1 Weak Quarterly Results
if you chart out Neureka Quarterly Results For the last 4 quarters, year-on-year (YoY) change and sequential change are colored in red.
Take a look at the tables below:
After being in the green for a long time, the company has posted losses for three consecutive quarters.
A decline in demand is seen in 2022 as compared to the same period last year. Last year, Neureka saw a huge jump in demand due to COVID-19.
This saw a spurt in the shifting of consumer demand from offline channels to online channels. Nureka, which focuses entirely on the digital sales channel, was a major gainer.
But this year, Neureka’s margins were hit due to lower demand, inflation in input costs, currency fluctuations as well as inflationary pressure in other non-core costs like packaging, transportation etc.
Employee costs have also increased recently due to aggressive talent acquisition.
For several quarters now, the company has struggled to maintain its growth at the lowest levels, resulting in a steep fall in the share price.
#2 FII selloff
In the most recent September 2022 quarter, Nureca’s shareholding pattern saw a sharp decline in foreign investors (FII) holding.
As of June 2022, the FII holding of Nureca stood at 12.04%. It came down to just 1.67% in the September 2022 quarter.
It seems that a large foreign investor has exited the stock and sold the holding in the retail individual category.
There has been a steady increase in individual holdings in Nureka.
Could this be a typical example of retail investors catching the falling knife? At the moment no one knows for sure.
how the stock has performed recently
Today, Neureka fell 4% to hit a new low of Rs 540 on BSE.
It touched a 52-week high of Rs 2,175 on 31 December 2021.
In the last one month, Nureca has fallen 30% while the stock is down 16% in the last five days.
Nureca’s shares are in free-fall. So far in 2022, they are down 73%.
Nureca is down 18% since listing.
Take a look at the table below that compares Nureca with its peers on important metrics.
Nureca is a medical equipment and supplies company engaged in the business of home healthcare and wellness products under the brand name “Dr. Trust”.
It sells products through online channel partners such as e-commerce players, distributors and retailers.
The company has a presence in both online and offline channels. Currently, 95% of revenue comes from e-commerce and digital channels.
(Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such,
This article is syndicated equitymaster.com
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