⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
GRAPHITE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | GRAPHITE | Market Cap | 11,705 Cr. | Current Price | 595 ₹ | High / Low | 685 ₹ |
| Stock P/E | 38.8 | Book Value | 287 ₹ | Dividend Yield | 1.85 % | ROCE | 10.3 % |
| ROE | 8.26 % | Face Value | 2.00 ₹ | DMA 50 | 603 ₹ | DMA 200 | 562 ₹ |
| Chg in FII Hold | -0.17 % | Chg in DII Hold | 0.44 % | PAT Qtr | 92.0 Cr. | PAT Prev Qtr | 145 Cr. |
| RSI | 44.8 | MACD | 8.47 | Volume | 10,98,609 | Avg Vol 1Wk | 14,87,163 |
| Low price | 366 ₹ | High price | 685 ₹ | PEG Ratio | -5.04 | Debt to equity | 0.03 |
| 52w Index | 71.9 % | Qtr Profit Var | -49.4 % | EPS | 15.5 ₹ | Industry PE | 38.4 |
📊 Core Financials
- Revenue & Profit Growth: Quarterly PAT declined from 145 Cr. to 92 Cr., with YoY profit variation at -49.4%, showing weak earnings momentum.
- Margins: ROE at 8.26% and ROCE at 10.3% reflect modest profitability compared to industry peers.
- Debt Ratios: Debt-to-equity at 0.03 indicates a nearly debt-free balance sheet.
- Cash Flows: Stable operating cash flows supported by electrode manufacturing, though cyclical demand impacts consistency.
- Return Metrics: EPS at 15.5 ₹ is modest relative to current valuation.
💹 Valuation Indicators
- P/E Ratio: 38.8, in line with industry PE of 38.4, suggesting fair valuation.
- P/B Ratio: ~2.1 (Current Price / Book Value), reasonable for the sector.
- PEG Ratio: -5.04, distorted due to declining earnings, signaling caution.
- Intrinsic Value: Current price (595 ₹) is near fair value; upside potential depends on recovery in demand cycles.
🏢 Business Model & Competitive Advantage
- Operates in graphite electrode manufacturing, catering to steel and alloy industries.
- Competitive advantage lies in established market presence and global customer base.
- Business model is cyclical, heavily dependent on steel sector demand and global commodity prices.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between 560 ₹ – 580 ₹ (near DMA 200).
- Long-Term Holding: Suitable for investors with moderate risk appetite; long-term returns depend on steel demand recovery and margin improvement.
Positive
- Debt-light balance sheet with debt-to-equity at 0.03.
- Dividend yield of 1.85% provides income support.
- Valuation in line with industry PE, suggesting fair pricing.
- Strong institutional support with rising DII inflows (+0.44%).
Limitation
- Weak profitability metrics (ROE 8.26%, ROCE 10.3%).
- Quarterly PAT decline of -49.4% highlights earnings pressure.
- PEG ratio signals poor growth-adjusted valuation.
Company Negative News
- Reduction in FII holdings (-0.17%) shows cautious foreign investor sentiment.
- Quarterly PAT decline from 145 Cr. to 92 Cr. reflects operational weakness.
Company Positive News
- Strong dividend yield of 1.85% supports investor confidence.
- Domestic institutional inflows (+0.44%) show local support.
Industry
- Graphite electrode industry is cyclical, driven by steel sector demand.
- Industry PE at 38.4 reflects fair valuations and moderate optimism.
Conclusion
- Graphite India shows fair valuation but weak profitability and earnings pressure.
- Debt-light structure and dividend yield are positives, but cyclical risks remain.
- Best suited for investors with moderate risk appetite, with entry near support levels for better risk-reward.
I can also contrast Graphite India with peers like HEG Ltd to highlight relative positioning in the electrode manufacturing sector.