ARE&M - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | ARE&M | Market Cap | 16,006 Cr. | Current Price | 875 ₹ | High / Low | 1,096 ₹ |
| Stock P/E | 21.2 | Book Value | 425 ₹ | Dividend Yield | 1.20 % | ROCE | 16.8 % |
| ROE | 12.3 % | Face Value | 1.00 ₹ | DMA 50 | 813 ₹ | DMA 200 | 901 ₹ |
| Chg in FII Hold | -0.06 % | Chg in DII Hold | -0.17 % | PAT Qtr | 183 Cr. | PAT Prev Qtr | 212 Cr. |
| RSI | 62.6 | MACD | 32.4 | Volume | 6,35,013 | Avg Vol 1Wk | 10,41,190 |
| Low price | 670 ₹ | High price | 1,096 ₹ | PEG Ratio | 1.07 | Debt to equity | 0.04 |
| 52w Index | 48.0 % | Qtr Profit Var | -22.1 % | EPS | 44.5 ₹ | Industry PE | 27.3 |
📊 Financials: ARE&M shows moderate fundamentals with ROE at 12.3% and ROCE at 16.8%, reflecting average capital efficiency. Debt-to-equity ratio of 0.04 highlights a strong balance sheet with minimal leverage. EPS of ₹44.5 supports earnings visibility, though quarterly PAT declined from ₹212 Cr. to ₹183 Cr. (-22.1%).
💹 Valuation: Current P/E of 21.2 is below industry average (27.3), suggesting fair valuation. PEG ratio of 1.07 indicates reasonable valuation relative to growth. P/B ratio (~2.1) is attractive compared to book value ₹425, offering intrinsic value comfort.
🏢 Business Model: ARE&M operates in renewable energy and infrastructure, benefiting from sectoral growth trends. Competitive advantage lies in low leverage and fair valuations. However, declining profitability and moderate return metrics limit upside potential.
📈 Entry Zone: Ideal accumulation range is ₹750–780, near support levels and below DMA 200 (₹901). Current price ₹875 is slightly above fair entry zone, making staggered buying advisable.
📌 Long-Term Holding: Suitable for long-term investors (2–4 years). Strong balance sheet and fair valuation support holding, with partial profit booking recommended near ₹1,000–1,050 resistance unless earnings growth accelerates.
Positive
- Fair valuation with P/E (21.2) below industry average (27.3)
- Strong balance sheet with low debt-to-equity (0.04)
- EPS of ₹44.5 supports earnings visibility
- Dividend yield of 1.20% provides income support
Limitation
- ROE (12.3%) and ROCE (16.8%) are moderate compared to top peers
- Quarterly PAT decline (-22.1%) indicates short-term weakness
- RSI at 62.6 suggests nearing overbought conditions
Company Negative News
- Decline in FII holdings (-0.06%) and DII holdings (-0.17%)
- Quarterly profit decline highlights earnings pressure
Company Positive News
- MACD positive (32.4) indicates bullish momentum
- EPS of ₹44.5 reflects earnings consistency
Industry
- Industry P/E at 27.3, slightly higher than company’s valuation, suggesting ARE&M trades at a discount
- Sector supported by infrastructure and renewable energy growth trends
Conclusion
ARE&M is a moderately attractive candidate for long-term investment, supported by fair valuations, low debt, and modest dividend yield. Entry near ₹750–780 offers better margin of safety. Existing holders can maintain positions with a 2–4 year horizon, booking partial profits near ₹1,000–1,050 resistance unless earnings growth improves.