AARTIIND - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | AARTIIND | Market Cap | 16,067 Cr. | Current Price | 443 ₹ | High / Low | 495 ₹ |
| Stock P/E | 43.5 | Book Value | 158 ₹ | Dividend Yield | 0.23 % | ROCE | 6.43 % |
| ROE | 6.22 % | Face Value | 5.00 ₹ | DMA 50 | 373 ₹ | DMA 200 | 402 ₹ |
| Chg in FII Hold | 0.30 % | Chg in DII Hold | 0.01 % | PAT Qtr | 146 Cr. | PAT Prev Qtr | 80.0 Cr. |
| RSI | 80.4 | MACD | 9.60 | Volume | 40,32,247 | Avg Vol 1Wk | 37,97,289 |
| Low price | 338 ₹ | High price | 495 ₹ | PEG Ratio | -1.28 | Debt to equity | 0.69 |
| 52w Index | 66.8 % | Qtr Profit Var | 211 % | EPS | 10.4 ₹ | Industry PE | 27.4 |
📊 Aarti Industries (AARTIIND) is currently trading at a premium valuation (P/E 43.5 vs industry 27.4) despite weak profitability metrics (ROE 6.22%, ROCE 6.43%). Dividend yield is low at 0.23%, and the PEG ratio is negative (-1.28), indicating poor earnings growth relative to price. While quarterly PAT showed a sharp jump (146 Cr. vs 80 Cr., +211%), sustainability remains uncertain. Technical indicators show overbought momentum (RSI 80.4, MACD positive), suggesting limited upside in the near term. Debt-to-equity ratio of 0.69 is moderate but adds financial risk.
💡 Ideal Entry Price Zone: 360 ₹ – 400 ₹, closer to long-term DMA support and valuation comfort. Current price (443 ₹) is stretched relative to fundamentals.
📌 Exit Strategy / Holding Period: If already holding, consider partial exit near 480–495 ₹ resistance levels. Long-term investors should only hold if expecting structural improvement in margins and profitability. Otherwise, reallocate capital to peers with stronger ROE/ROCE. Holding period should be limited until earnings growth stabilizes.
Positive
- Quarterly PAT growth of 211% (146 Cr. vs 80 Cr.).
- FII holdings increased (+0.30%), showing foreign investor confidence.
- Stock trading above 200 DMA (402 ₹) indicates medium-term strength.
- Strong trading volumes above average suggest investor interest.
Limitation
- High P/E ratio (43.5) compared to industry average (27.4).
- Weak ROE (6.22%) and ROCE (6.43%) indicate poor efficiency.
- Dividend yield is very low at 0.23%.
- PEG ratio (-1.28) highlights poor earnings growth relative to price.
- RSI at 80.4 suggests overbought conditions.
Company Negative News
- Weak profitability metrics despite revenue growth.
- Moderate debt-to-equity ratio (0.69) adds financial risk.
Company Positive News
- Quarterly PAT more than doubled (+211%).
- FII holdings increased (+0.30%), reflecting foreign confidence.
- MACD positive (9.60) suggests bullish momentum.
Industry
- Industry P/E is 27.4, highlighting AARTIIND’s premium valuation.
- Chemicals sector has long-term demand potential driven by specialty chemicals and exports.
Conclusion
⚠️ Aarti Industries is currently overvalued with weak profitability metrics. It is not an ideal candidate for long-term investment at current levels. Entry should be considered only around 360–400 ₹ for valuation comfort. Existing holders may exit near 480–495 ₹ resistance unless ROE/ROCE improve significantly and earnings growth becomes sustainable.