HSCL - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 4.1

📊 Core Financials:

- Quarterly PAT at ₹187 Cr vs ₹183 Cr previously → steady growth.

- Strong profitability with ROCE at 22.6% and ROE at 16.8%.

- Debt-to-equity ratio at 0.20 → manageable leverage.

- Cash flows supported by consistent earnings, though dividend yield is low at 0.13%.

💹 Valuation Indicators:

- Current P/E: 36.0 vs Industry P/E: 35.3 → fairly valued.

- P/B ratio: ~5.9 (₹478 / ₹80.9) → premium valuation.

- PEG ratio: 0.34 → attractive, suggests undervaluation relative to growth.

- Intrinsic value appears close to CMP, offering reasonable entry opportunity.

🏢 Business Model & Competitive Advantage:

- HSCL operates in specialty chemicals and materials, catering to diverse industrial applications.

- Competitive advantage lies in product innovation, strong client base, and sectoral demand growth.

- Market cap of ₹24,136 Cr reflects mid-cap leadership in its niche.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹478 is above DMA 50 (₹459) and DMA 200 (₹465), showing technical strength.

- RSI at 52.4 and MACD positive → neutral to bullish momentum.

- Suggested entry zone: ₹450–₹470.

- Long-term holding recommended due to strong growth prospects, but dividend yield is minimal.

Positive

• Strong ROCE (22.6%) and ROE (16.8%).
• PEG ratio of 0.34 indicates undervaluation relative to growth.
• Quarterly PAT growth with profit variation of 39%.

Limitation

• Low dividend yield (0.13%).
• P/B ratio ~5.9 indicates premium valuation.
• Moderate debt-to-equity ratio (0.20).

Company Negative News

• DII holdings reduced by -1.65%.
• Dividend payout remains weak compared to peers.

Company Positive News

• FII holdings increased by 0.42%.
• Quarterly PAT improved from ₹183 Cr to ₹187 Cr.

Industry

• Specialty chemicals industry is witnessing strong demand across industrial and consumer sectors.
• Industry P/E at 35.3 indicates sector is moderately valued, in line with HSCL’s P/E of 36.0.

Conclusion

⚖️ HSCL demonstrates solid fundamentals with strong return ratios and growth momentum. Valuations are fair compared to industry peers, with PEG ratio suggesting undervaluation. Entry is favorable around ₹450–₹470 for long-term investors. While dividend yield is low, strong business prospects and sectoral demand support long-term wealth creation potential.