SARDAEN - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 3.9

📊 Core Financials Analysis

Profitability

ROE of 12.9% and ROCE of 16.6% reflect solid capital efficiency.

EPS of ₹23.1 is healthy, supporting a reasonable valuation.

PAT surged from ₹115 Cr to ₹386 Cr QoQ, a 113% jump, indicating strong operational momentum.

Balance Sheet Strength

Debt-to-equity ratio of 0.26 shows prudent leverage.

Dividend yield is modest at 0.26%, but consistent with reinvestment-focused growth.

Cash Flow & Stability

Strong quarterly profit growth and low debt suggest robust cash generation.

Book Value of ₹165 vs Current Price ₹569 implies a P/B ratio of ~3.45 — slightly premium but not excessive.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 24.6 Slightly above industry PE of 23.1 — fair valuation

P/B Ratio ~3.45 Reasonable for a growth-oriented firm

PEG Ratio -8.08 Skewed due to explosive profit growth

Intrinsic Value ~₹500–₹530 Slightly below current price — mildly overvalued

The stock is fairly valued, with upside potential if earnings growth sustains.

🏭 Business Model & Competitive Advantage

Sector: Sarda Energy & Minerals Ltd operates in steel, ferro alloys, and hydropower — a diversified industrial play.

Strengths

Integrated operations from mining to power generation

Strong profit margins and capital efficiency

Rising institutional interest (FII +0.37%)

Risks

Cyclical exposure to commodity prices

PEG ratio distortion due to volatile earnings

According to AlphaSpread, SARDAEN is currently overvalued by ~60% based on intrinsic valuation models

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. However, its solvency score of 63/100 and profitability score of 51/100 suggest a fundamentally sound business.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹500–₹530

Near intrinsic value and 50 DMA (₹545)

RSI at 48.7 indicates neutral momentum

MACD positive, signaling bullish undertone

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and diversified operations support long-term growth.

Accumulate on Dips: Especially near ₹500 levels for better margin of safety.

Watchlist Triggers

Sustained EPS growth

Margin expansion

Institutional accumulation

Sarda Energy is a well-run industrial player with solid fundamentals. While not deeply undervalued, it offers a compelling long-term story if earnings momentum continues.

Let me know if you'd like a peer comparison or sector outlook to sharpen the view.

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