GRAPHITE - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.2

📊 Core Financials & Profitability

EPS (₹23.6) paired with a sharp PAT recovery (+206%) — signs of a turnaround.

ROE (7.93%) & ROCE (10.1%) — modest but improving; not stellar for capital-heavy sector.

Debt-to-Equity (0.03) — almost debt-free, which adds cushion against economic shocks.

Dividend Yield (2%) — indicates decent shareholder return policy despite past volatility.

⚠️ Recovery looks promising but financial depth needs sustained performance to validate current pricing.

📉 Valuation Metrics

Metric Value Interpretation

P/E Ratio 23.6 Undervalued vs industry PE (41.2) — attractively priced

P/B Ratio ~1.83 Fairly valued given earnings quality and asset strength

PEG Ratio -7.01 Distorted due to prior earnings dip — not meaningful

Intrinsic Value — Estimated range ₹500–₹530 — slightly undervalued

Current price suggests early-stage re-rating, with upside if margins stay consistent.

🧪 Business Model & Competitive Advantage

Sector: Graphite electrodes — used primarily in steel production (EAF process).

Strengths

Global export player with strategic presence in US and Europe.

Almost nil debt and strong asset base — helps during downcycles.

Risks

Highly cyclical — tied to steel demand, power prices, and raw material costs.

Institutional holdings shrinking (FII -0.47%, DII -0.42%) — cautious sentiment.

Fluctuating margins — PAT has swung from losses to gains within a quarter.

🧮 Technical Indicators & Entry Strategy

Current Price: ₹550

DMA 50 / DMA 200: ₹548 / ₹521 — price is hovering above support zones

RSI (45.8): Neutral-bearish — cautious momentum

MACD (+0.45): Minor bullish crossover — early accumulation signal

Volume: Below average — wait for breakout confirmation

🛒 Suggested Entry Zone: ₹500–₹530 Ideal for medium-term holding; enter in tranches if MACD trend sustains and RSI moves toward 55+

📦 Long-Term Outlook

Business is deeply exposed to global industrial cycles; asset-light but volatile.

Patience required — performance could vary based on steel demand and China supply dynamics.

Key to re-rating will be sustaining 12%+ ROCE and achieving consistent profitability.

Want to compare it with HEG or Rain Industries? I can unpack raw material cost impacts and export volatility next, so you get a sharper edge on strategic accumulation ⚙️📊 Let’s crunch deeper if you're up for it.

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