⚠ 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.
POONAWALLA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.7
| Stock Code | POONAWALLA | Market Cap | 31,724 Cr. | Current Price | 390 ₹ | High / Low | 570 ₹ |
| Stock P/E | 90.8 | Book Value | 121 ₹ | Dividend Yield | 0.00 % | ROCE | 4.77 % |
| ROE | -1.29 % | Face Value | 2.00 ₹ | DMA 50 | 452 ₹ | DMA 200 | 443 ₹ |
| Chg in FII Hold | 0.05 % | Chg in DII Hold | -0.06 % | PAT Qtr | 150 Cr. | PAT Prev Qtr | 74.2 Cr. |
| RSI | 27.0 | MACD | -18.5 | Volume | 9,87,057 | Avg Vol 1Wk | 13,57,656 |
| Low price | 267 ₹ | High price | 570 ₹ | Debt to equity | 3.66 | 52w Index | 40.5 % |
| Qtr Profit Var | 702 % | EPS | 4.37 ₹ | Industry PE | 18.9 |
📊 Core Financials
- Revenue & Profitability: Quarterly PAT surged to ₹150 Cr from ₹74.2 Cr, showing strong growth momentum. However, EPS remains low at ₹4.37.
- Margins: ROCE at 4.77% and ROE at -1.29% indicate weak efficiency and poor shareholder returns.
- Debt Ratios: Debt-to-equity at 3.66 is very high, raising concerns about leverage and financial risk.
- Cash Flows: High debt burden suggests pressure on cash flows despite recent profit growth.
💹 Valuation Indicators
- P/E Ratio: 90.8, far above industry average of 18.9, indicating extreme overvaluation.
- P/B Ratio: Current price ₹390 vs. book value ₹121 → ~3.2x, moderately expensive relative to assets.
- PEG Ratio: Not available, making growth-adjusted valuation unclear.
- Intrinsic Value: Current valuation appears significantly higher than intrinsic worth given weak ROE and high debt.
🏢 Business Model & Competitive Advantage
- Financial services company with focus on lending and credit solutions.
- Competitive advantage limited due to high leverage and weak return ratios.
- Business model dependent on credit growth, but sustainability is questionable with current debt levels.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Safer accumulation range between ₹270 – ₹310, closer to 52-week low and below DMA200.
- Long-Term Holding: Risky for long-term investors unless debt is reduced and ROE improves. Better suited for high-risk traders than conservative investors.
✅ Positive
- Quarterly profit growth of 702% YoY indicates strong momentum.
- FII holding increased slightly (+0.05%), showing marginal foreign investor confidence.
- 52-week performance shows 40.5% index gain.
⚠️ Limitation
- Extremely high P/E ratio compared to industry average.
- Negative ROE highlights poor shareholder returns.
- High debt-to-equity ratio (3.66) raises solvency concerns.
📉 Company Negative News
- Decline in DII holding (-0.06%) indicates reduced domestic institutional confidence.
- Weak ROCE and ROE despite profit growth.
- High leverage could limit future expansion and profitability.
📈 Company Positive News
- Quarterly PAT doubled compared to previous quarter.
- Strong YoY profit variation of 702%.
- Stock has rebounded from 52-week low of ₹267 to current ₹390.
🏭 Industry
- Financial services sector trades at industry PE of 18.9, far below company’s valuation.
- Sector growth supported by credit demand, but sustainability depends on debt management.
🔎 Conclusion
- Poonawalla shows strong short-term profit growth but weak fundamentals with high debt and poor return ratios.
- Valuation is stretched, making current levels unattractive for fresh entry.
- Best strategy is cautious accumulation near ₹270 – ₹310 with strict monitoring of debt reduction and ROE improvement.
Would you like me to also prepare a risk-reward comparison chart in HTML format that contrasts Poonawalla with safer peers in the financial services sector?