FACT - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 2.6

📊 Core Financials Analysis

Profitability

ROE: 1.61% and ROCE: 8.65% — both are weak, especially for a company with such a large market cap.

EPS: ₹1.46 — extremely low, which makes the P/E of 793 wildly unjustifiable.

PAT Qtr: ₹4.28 Cr vs ₹57.6 Cr — massive drop, suggesting either a one-off prior gain or deteriorating margins.

Balance Sheet & Leverage

Debt-to-Equity: 1.32 — relatively high, which adds financial risk.

Book Value: ₹21.2 — implies a P/B ratio of ~46.9, which is extremely inflated.

Dividend Yield: 0.04% — negligible, not attractive for income investors.

💰 Valuation Metrics

Metric Value Comment

P/E Ratio 793 Excessively overvalued vs industry PE of 30.1

PEG Ratio -12.6 Negative PEG indicates unreliable or declining growth

Intrinsic Value ~₹600–₹700 CMP is significantly above fair value

The valuation is disconnected from earnings and return metrics. This is likely driven by speculative interest or momentum rather than fundamentals.

🏭 Business Model & Competitive Position

Sector: Fertilizers & Chemicals — cyclical, heavily influenced by government subsidies and input costs.

Operations

Produces ammonium sulphate, complex fertilizers, and caprolactam.

Also involved in engineering consultancy and fabrication services.

Strengths

Legacy PSU with strategic importance in India’s agri-input supply chain.

Government support can provide stability during downturns.

Weaknesses

Poor profitability and return ratios.

High leverage and minimal institutional interest (FII/DII changes are negligible).

EPS and PAT volatility raise red flags on earnings quality.

📉 Technicals & Entry Zone

Current Price: ₹994

DMA 50: ₹967 | DMA 200: ₹901 — bullish trend intact

RSI: 52.8 — neutral zone

MACD: Positive — momentum still alive

📌 Suggested Entry Zone: ₹850–₹900

Only consider entry if price corrects significantly and earnings show consistent improvement.

🧭 Long-Term Holding Guidance

Avoid fresh entry at CMP: Valuation is unsustainable unless earnings improve dramatically.

Hold with caution if already invested: Monitor quarterly results, debt levels, and any government policy changes. Consider trimming if momentum fades and fundamentals don’t catch up.

Let me know if you'd like a peer comparison with other fertilizer stocks like RCF, Chambal Fertilizers, or Deepak Fertilisers.

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