⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
ARE&M - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | ARE&M | Market Cap | 14,353 Cr. | Current Price | 784 ₹ | High / Low | 1,109 ₹ |
| Stock P/E | 19.0 | Book Value | 425 ₹ | Dividend Yield | 1.34 % | ROCE | 16.8 % |
| ROE | 12.3 % | Face Value | 1.00 ₹ | DMA 50 | 845 ₹ | DMA 200 | 937 ₹ |
| Chg in FII Hold | -0.60 % | Chg in DII Hold | 0.88 % | PAT Qtr | 183 Cr. | PAT Prev Qtr | 212 Cr. |
| RSI | 36.6 | MACD | -22.6 | Volume | 4,15,341 | Avg Vol 1Wk | 4,27,137 |
| Low price | 759 ₹ | High price | 1,109 ₹ | PEG Ratio | 0.96 | Debt to equity | 0.04 |
| 52w Index | 7.33 % | Qtr Profit Var | -22.1 % | EPS | 44.5 ₹ | Industry PE | 25.0 |
📊 Financials
- Revenue & Profitability: PAT declined from ₹212 Cr. to ₹183 Cr., showing -22.1% quarterly variation. EPS at ₹44.5 is decent, reflecting moderate earnings strength.
- Margins & Returns: ROCE at 16.8% and ROE at 12.3% are healthy but not exceptional compared to industry leaders.
- Debt & Liquidity: Debt-to-equity ratio of 0.04 indicates a nearly debt-free balance sheet, ensuring financial resilience.
- Cash Flow: Dividend yield of 1.34% provides steady shareholder returns.
💹 Valuation
- P/E Ratio: 19.0 vs Industry PE of 25.0 — trading at a discount, suggesting undervaluation.
- P/B Ratio: Current price ₹784 vs Book Value ₹425 — ~1.8x book value, fair valuation.
- PEG Ratio: 0.96 — indicates reasonable valuation relative to growth.
- Intrinsic Value: Current price is near fair value, offering a margin of safety.
🏢 Business Model & Competitive Advantage
- Operates in engineering and manufacturing with diversified offerings.
- Low debt enhances resilience and flexibility in expansion.
- Moderate returns suggest steady but not industry-leading competitive strength.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between ₹760 – ₹800, near its 52-week low.
- Long-Term Holding: Fundamentals are stable, valuations attractive. Accumulate on dips for long-term growth, though monitor profit trends.
✅ Positive
- Low debt-to-equity ratio (0.04) ensures financial stability.
- Dividend yield of 1.34% provides shareholder returns.
- DII holdings increased by 0.88%, showing domestic institutional confidence.
⚠️ Limitation
- Quarterly PAT declined (-22.1%), showing earnings weakness.
- ROE at 12.3% is moderate compared to industry leaders.
- Technical indicators show weakness with RSI at 36.6 and MACD negative (-22.6).
📉 Company Negative News
- FII holdings declined by 0.60%, showing reduced foreign investor confidence.
- Quarterly profit decline highlights short-term weakness.
📈 Company Positive News
- Valuation attractive with P/E below industry average.
- DII holdings increased, showing confidence from domestic institutions.
- Debt-free balance sheet enhances resilience.
🏭 Industry
- Engineering and manufacturing sector benefits from infrastructure and industrial demand.
- Industry PE at 25.0 is higher than company’s valuation, highlighting potential undervaluation of ARE&M.
🔎 Conclusion
ARE&M shows stable fundamentals with low debt, fair valuation, and steady returns. While short-term profit decline and weak technicals raise caution, the stock trades at a discount compared to industry peers. Best strategy: accumulate near ₹760–₹800 and hold for long-term gains, leveraging industry growth and the company’s resilience.