Mufti Stock Crashes 55% Below IPO Price Buy, Hold, or Sell? A Complete Analysis

Mufti Stock : Decline Understanding the Fall and Future Prospects

Credo Brands Marketing Ltd., the parent company of Mufti, has been in the spotlight for its declining stock price. The stock, which was listed on December 27, 2023, at ₹282.35, saw an initial surge but has since experienced consistent selling pressure. As of February 27, 2025, Mufti’s stock closed at ₹124.28 on the NSE, a drop of over 50% from its August 2024 high. Current Market cap of this is around ₹ 800 crore.

The stock is now trading near its all-time low of ₹120, which it touched on February 14, 2025. This has raised concerns among investors. Why is Mufti’s stock falling? What does the future hold for the company? Let’s explore the factors behind the decline and whether there are any growth opportunities ahead. Here we will try to cover all the important factors those lead the fall in this stock.

Why is Mufti Stock Falling?

Several reasons have contributed to the sharp decline in Mufti’s stock price:

1. Declining Profits

The financial performance of the company has weakened in recent quarters. Mufti reported a net profit of ₹26 crore in September 2024, which dropped to ₹18 crore in December 2024. Investors typically react negatively to declining profits, leading to selling pressure.

2. Overall Selling Pressure in the Market

The broader Indian stock market has witnessed all-round selling pressure, impacting multiple sectors, including consumer and retail stocks like Mufti. After the company posted weak quarterly results, investors rushed to offload shares, further driving down the stock price.

3. Overvaluation Concerns (High P/E Ratio)

Before the decline, Mufti’s stock was trading at a higher Price-to-Earnings (P/E) ratio compared to the industry average. A high P/E ratio often indicates an overvalued stock, making it vulnerable to corrections. Investors who found the stock expensive at higher levels chose to book profits, leading to a further decline.

4. Rising Competition in the Clothing Sector

The apparel industry is highly competitive, with numerous players entering the market. Unlike other industries, the clothing business has no major entry barriers, allowing new brands to emerge and challenge established names like Mufti. Competitors such as Zodiac, Raymond, Indian Terrain, and international brands like Levi’s and Zara continue to intensify competition, affecting Mufti’s market share.

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5. Declining EPS and Weak Sales Growth

Earnings per share (EPS) is a crucial metric for investors. Mufti’s EPS has declined from ₹4.07 in September 2024 to ₹2.81 in December 2024, signaling weaker earnings. The company’s sales also dropped from ₹186 crore to ₹156 crore in the same period. This downward trend in financials has contributed to negative sentiment around the stock.

6. Fear of Weak Future Performance

Market analysts and investors are concerned that Mufti’s upcoming quarterly results may be weaker due to sluggish sales and rising costs. This anticipation has led to panic selling, further pushing the stock price down.

Mufti stock Financial Performance Over the Last Five Quarters

To better understand the financial trajectory of Mufti, let’s look at the company’s standalone quarterly financial results:

Key observations from these numbers:

• The September 2024 quarter was the best-performing period, with the highest sales and profit.
• The March 2024 quarter was the weakest, with net profit dropping to just ₹7 crore.
• Sales and profits fluctuated significantly, causing uncertainty among investors.

For More Details About Financials and other important Factors of Mufti stock Click Here

Growth Expectations in Mufti stock (Credo Brands)

While the stock is facing a downturn, there are reasons to believe in Mufti’s long-term growth potential. Let’s look at the company’s key strengths and future opportunities.

1. Strong Profit and Revenue Growth

Despite recent setbacks, Mufti has achieved an 89.89% profit growth over the past three years. Its revenue has grown by 24.58% in the same period, indicating a strong demand for its products.

2. High Return on Equity (ROE) and Return on Capital Employed (ROCE)

• ROE: 21.61% (over the last three years) → Shows efficient use of shareholders’ equity.
• ROCE: 33.99% → Indicates effective capital utilization.

These metrics suggest that Mufti remains a financially sound company with strong profitability.

3. Healthy Operating Margins

Mufti has maintained an average operating margin of 20.04% over the last five years. This indicates that the company is efficiently managing costs while sustaining profitability.

4. Strong Liquidity and Cash Flow Management

• Current ratio: 2.66 → Shows that Mufti has enough short-term assets to cover liabilities.
• CFO/PAT: 1.51 → Indicates that cash flows from operations are strong relative to profit after tax.

5. High Promoter Holding and Operating Leverage

Mufti enjoys a high promoter holding of 54.64%, which is a positive sign as it reflects strong confidence from the founders. Additionally, the company’s operating leverage of 5.41 means that a slight increase in sales can lead to significant profit growth.

6. Future Expansion Plans and Market Opportunities

• The Indian apparel market is growing rapidly, with rising demand for casual and premium clothing.
• Mufti is focusing on expanding its retail presence across India and increasing its footprint on e-commerce platforms.
• The brand has strong brand recognition, which will help it maintain a loyal customer base.

Mufti IPO: A Recap

Mufti’s IPO (Credo Brands Marketing Limited) was launched in December 2023 and was oversubscribed 51.85 times. The IPO was priced between ₹266 – ₹280 per share and raised approximately ₹550 crore.

Subscription details:

• QIBs (Qualified Institutional Buyers): 104.95 times subscription
• Non-Institutional Investors: 55.52 times subscription
• Retail Investors: 19.94 times subscription

Despite the overwhelming demand, the stock had a muted debut at ₹282.35 on NSE and ₹282 on BSE, barely above its issue price.