DCMSHRIRAM - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 3.2

📊 Core Financials

• Revenue & Profitability: PAT rose to 168 Cr. from 96.7 Cr., showing strong sequential growth, but overall margins remain modest.
• Margins: ROE at 8.07% and ROCE at 10.8% indicate average efficiency compared to peers.
• Debt Ratios: Debt-to-equity at 0.30 — manageable leverage, not excessive.
• Cash Flows: Dividend yield of 0.74% provides limited shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 27.4 vs Industry PE of 23.7 — slightly overvalued compared to sector average.
• P/B Ratio: Current Price 1,211 ₹ / Book Value 464 ₹ ≈ 2.61, fair valuation.
• PEG Ratio: -1.46 — negative due to weak growth outlook, caution warranted.
• Intrinsic Value: Current valuation moderately stretched; fundamentals do not fully justify premium pricing.

🏢 Business Model & Competitive Advantage

• Diversified operations across chemicals, fertilizers, and agribusiness, providing resilience.
• Competitive advantage lies in integrated operations and established market presence.
• DII holdings increased (+0.20%), showing domestic institutional support, though FII reduced (-0.17%).

📈 Technical & Entry Zone

• DMA 50: 1,231 ₹ | DMA 200: 1,198 ₹ — stock trading close to support levels.
• RSI: 47.8 — neutral zone, not overbought.
• MACD: 1.12 — mild bullish momentum.
• Entry Zone: Attractive near 1,050–1,100 ₹ for accumulation.
• Long-Term Holding: Suitable for cautious investors; requires improvement in return ratios for stronger conviction.

✅ Positive

• Strong sequential PAT growth (168 Cr. vs 96.7 Cr.).
• Diversified business model across multiple sectors.
• Manageable debt-to-equity ratio (0.30).

⚠️ Limitation

• ROE (8.07%) and ROCE (10.8%) are relatively weak.
• Negative PEG ratio (-1.46) reflects poor growth outlook.
• Dividend yield of 0.74% offers limited shareholder returns.

📉 Company Negative News

• FII holdings reduced (-0.17%), showing weaker foreign investor sentiment.
• Return ratios remain below industry benchmarks.

📈 Company Positive News

• Quarterly PAT surged 242% sequentially, indicating operational recovery.
• DII holdings increased (+0.20%), reflecting domestic institutional confidence.

🏭 Industry

• Industry PE at 23.7 — sector trades at moderate valuations.
• Chemicals and agribusiness industry benefits from demand stability but faces cyclical risks.

🔎 Conclusion

DCMSHRIRAM shows strong sequential profit growth but remains fundamentally average with weak return ratios and negative PEG. Valuation is slightly above industry average. Entry is attractive near 1,050–1,100 ₹, with cautious long-term holding recommended. Improvement in efficiency and sustained earnings growth will be key for stronger upside potential.