DCMSHRIRAM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.8

📊 Core Financials

Earnings & Profitability: EPS of ₹36.5 and PAT of ₹96.7 Cr show a stable quarter, though down from ₹175 Cr previously. ROCE at 10.8% and ROE at 8.07% are modest, suggesting moderate capital efficiency.

Debt Profile: Debt-to-equity of 0.36 is manageable, indicating financial prudence.

Cash Flow: While not explicitly stated, consistent earnings and moderate debt imply stable operating cash flows.

Quarterly Profit Variation: A 3.28% change suggests earnings are stabilizing after prior volatility.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 36.4 Premium vs. industry PE (25.9)

P/B Ratio ~2.97 Reasonable premium over book value

PEG Ratio -1.93 Negative PEG flags caution on growth

Dividend Yield 0.67% Modest, adds to shareholder value

Valuation is slightly stretched, especially given the negative PEG and moderate return metrics.

🧪 Business Model & Competitive Advantage

DCM Shriram Ltd. operates across diversified segments including

Specialty Chemicals (vinyl, caustic soda)

Sugar & Ethanol

Fertilizers & Farm Solutions

Fenesta Building Systems

Its strengths lie in

Integrated operations across agri and industrial verticals

Strong rural distribution and brand equity

Strategic ethanol expansion aligned with India’s green energy goals

The company has delivered 250% returns over five years, supported by 9.2% quarterly revenue growth and a 4.6% profit margin

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. It’s considered a potential multibagger in the specialty chemicals space

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📈 Technical & Sentiment Indicators

RSI: 56.7 – Neutral zone, suggesting balanced momentum.

MACD: -5.24 – Bearish crossover, indicating short-term weakness.

Volume Dip – Below weekly average, signaling reduced interest.

DMA 50 & 200: Price is above both, confirming medium-term strength.

Recent price action shows the stock outperforming its sector with an 8.04% gain on September 17, 2025

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. It’s currently trading above all major moving averages except the 50-DMA, indicating mixed short-term signals

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹1,250–₹1,280, near DMA 50 and technical support.

Current Price ₹1,335: Slightly above ideal entry, but still reasonable for accumulation.

🕰️ Long-Term Holding

Hold or Accumulate on Dips: Diversified business model, ethanol tailwinds, and historical returns make it a solid long-term candidate.

Watch Profit Margins & PEG Ratio: Sustained margin improvement and earnings growth are key to justifying current valuation.

You can explore DCM Shriram’s technical outlook and sector performance or review its long-term price targets and multibagger potential for deeper insights. Let me know if you'd like a peer comparison with Deepak Nitrite or Chambal Fertilisers.

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stockpricearchive.com

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www.marketsmojo.com

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