ARE&M - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | ARE&M | Market Cap | 15,339 Cr. | Current Price | 838 ₹ | High / Low | 1,109 ₹ |
| Stock P/E | 19.0 | Book Value | 425 ₹ | Dividend Yield | 1.26 % | ROCE | 16.8 % |
| ROE | 12.3 % | Face Value | 1.00 ₹ | DMA 50 | 896 ₹ | DMA 200 | 974 ₹ |
| Chg in FII Hold | -0.60 % | Chg in DII Hold | 0.88 % | PAT Qtr | 212 Cr. | PAT Prev Qtr | 194 Cr. |
| RSI | 37.2 | MACD | -24.5 | Volume | 4,58,145 | Avg Vol 1Wk | 3,73,256 |
| Low price | 805 ₹ | High price | 1,109 ₹ | PEG Ratio | 0.96 | Debt to equity | 0.04 |
| 52w Index | 10.8 % | Qtr Profit Var | -12.1 % | EPS | 53.3 ₹ | Industry PE | 28.1 |
📊 Financials: ARE&M shows moderate fundamentals with ROCE at 16.8% and ROE at 12.3%, reflecting average capital efficiency. Quarterly PAT improved from ₹194 Cr. to ₹212 Cr., though profit variation shows -12.1%, indicating some earnings pressure. Debt-to-equity is very low at 0.04, highlighting a nearly debt-free balance sheet. EPS of ₹53.3 is decent relative to its market cap of ₹15,339 Cr.
💹 Valuation: The stock trades at a P/E of 19.0, below the industry average of 28.1, suggesting undervaluation. P/B ratio is ~1.97 (838/425), which is reasonable. PEG ratio of 0.96 indicates fair valuation relative to growth. Dividend yield of 1.26% provides modest income support.
🏢 Business Model & Competitive Advantage: ARE&M operates in renewable energy and allied sectors, benefiting from India’s push toward clean energy. Its competitive advantage lies in diversified operations, low debt, and steady earnings. However, profitability metrics are moderate compared to industry leaders, limiting upside potential.
📈 Entry Zone: Technicals show RSI at 37.2 (near oversold) and MACD negative, with price below DMA 50 & 200. Accumulation may be considered near ₹805–850 for long-term investors. Current valuations are attractive compared to peers, making it suitable for gradual accumulation.
Positive
- Low debt-to-equity ratio (0.04) ensures financial stability.
- P/E ratio (19.0) below industry average (28.1), suggesting undervaluation.
- Dividend yield of 1.26% adds investor appeal.
Limitation
- ROCE (16.8%) and ROE (12.3%) are moderate compared to peers.
- Quarterly profit variation (-12.1%) shows earnings pressure.
- Stock trading below DMA 200, reflecting weak momentum.
Company Negative News
- Decline in FII holdings (-0.60%) shows reduced foreign investor confidence.
- Weak technical momentum with MACD negative.
Company Positive News
- DII holdings increased by 0.88%, reflecting domestic institutional support.
- Quarterly PAT growth from ₹194 Cr. to ₹212 Cr. highlights operational improvement.
Industry
- Renewable energy sector benefits from government initiatives and global demand for clean energy.
- Industry P/E at 28.1 is higher than ARE&M, showing sector-wide growth potential.