CREDITACC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 2.8

📊 Core Financials

• Revenue & Profitability: PAT improved sequentially to 126 Cr. from 60.2 Cr., but YoY profit variation is -32.4%.
• Margins: ROE at 7.86% and ROCE at 9.55% reflect modest efficiency.
• Debt Ratios: Debt-to-equity stands high at 2.81, indicating leveraged balance sheet risk.
• Cash Flows: No dividend yield (0%) suggests reinvestment but weak direct shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 153 vs Industry PE of 80.3 — significantly overvalued.
• P/B Ratio: Current Price 1,283 ₹ / Book Value 448 ₹ ≈ 2.86, moderately valued.
• PEG Ratio: 10.5 — poor growth-adjusted valuation.
• Intrinsic Value: Current valuation stretched; fundamentals do not justify price.

🏢 Business Model & Competitive Advantage

• Operates in credit financing, focusing on retail lending and niche borrower segments.
• Competitive advantage lies in specialized lending, but high cost of funds and leverage dilute strength.
• Institutional confidence: FII holdings +0.16%, DII holdings +0.57% — slight positive sentiment.

📈 Technical & Entry Zone

• DMA 50: 1,330 ₹ | DMA 200: 1,266 ₹ — stock trading near long-term support.
• RSI: 40.2 — approaching oversold territory.
• MACD: -25.9 — bearish momentum persists.
• Entry Zone: Attractive near 1,000–1,100 ₹ if fundamentals stabilize.
• Long-Term Holding: Only advisable if debt reduces and return ratios improve.

✅ Positive

• Sequential PAT growth from 60.2 Cr. to 126 Cr.
• Institutional investors increasing stake (FII/DII).
• Strong market cap of 20,523 Cr. with established industry presence.

⚠️ Limitation

• High P/E ratio (153) compared to industry average.
• Weak ROE and ROCE, showing inefficient capital utilization.
• No dividend yield, limiting shareholder returns.

📉 Company Negative News

• Quarterly profit variation -32.4% YoY.
• High debt-to-equity ratio of 2.81 raises solvency concerns.

📈 Company Positive News

• Strong sequential PAT growth indicates operational recovery.
• Positive institutional holding changes (FII +0.16%, DII +0.57%).

🏭 Industry

• Industry PE at 80.3 — sector is generally overvalued.
• Credit financing industry faces regulatory and interest rate risks.

🔎 Conclusion

CREDITACC shows sequential profitability recovery but remains fundamentally overvalued with high leverage and weak return ratios. Entry is advisable only at lower levels (1,000–1,100 ₹). Long-term holding should be considered cautiously, contingent on debt reduction and improved efficiency.