ABBOTINDIA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | ABBOTINDIA | Market Cap | 57,929 Cr. | Current Price | 27,250 ₹ | High / Low | 37,000 ₹ |
| Stock P/E | 38.4 | Book Value | 1,888 ₹ | Dividend Yield | 1.74 % | ROCE | 46.2 % |
| ROE | 35.7 % | Face Value | 10.0 ₹ | DMA 50 | 28,207 ₹ | DMA 200 | 29,598 ₹ |
| Chg in FII Hold | 0.03 % | Chg in DII Hold | -0.11 % | PAT Qtr | 415 Cr. | PAT Prev Qtr | 366 Cr. |
| RSI | 41.6 | MACD | -348 | Volume | 8,058 | Avg Vol 1Wk | 10,071 |
| Low price | 25,999 ₹ | High price | 37,000 ₹ | PEG Ratio | 1.83 | Debt to equity | 0.05 |
| 52w Index | 11.4 % | Qtr Profit Var | 15.8 % | EPS | 710 ₹ | Industry PE | 29.1 |
📊 Abbott India shows strong fundamentals with excellent ROCE (46.2%) and ROE (35.7%), reflecting efficient capital usage and profitability. The company has negligible debt (0.05 D/E), consistent earnings growth (PAT up 15.8% QoQ), and a healthy dividend yield (1.74%). Valuations are on the higher side (P/E 38.4 vs industry 29.1), but justified by strong profitability metrics. PEG ratio of 1.83 suggests the stock is slightly expensive relative to growth. Technical indicators show weak momentum (RSI 41.6, MACD negative), with the stock trading below both 50 DMA and 200 DMA, indicating consolidation.
💡 Ideal Entry Price Zone: 26,000 ₹ – 27,000 ₹, closer to long-term support and valuation comfort. Current price (27,250 ₹) is near this zone, offering a fair entry point for long-term investors.
📌 Exit Strategy / Holding Period: If already holding, maintain a long-term horizon (3–5 years) given strong ROE/ROCE and consistent dividend payouts. Partial profit booking can be considered near 36,000–37,000 ₹ resistance. Long-term investors should hold as the company’s fundamentals support compounding returns.
Positive
- High ROCE (46.2%) and ROE (35.7%) show strong efficiency and profitability.
- Low debt-to-equity ratio (0.05) ensures financial stability.
- Dividend yield of 1.74% provides steady income return.
- Quarterly PAT growth of 15.8% indicates earnings momentum.
Limitation
- High P/E ratio (38.4) compared to industry average (29.1).
- PEG ratio (1.83) suggests valuations are slightly expensive relative to growth.
- Stock trading below 200 DMA (29,598 ₹) indicates weak momentum.
- RSI at 41.6 reflects neutral to weak sentiment.
Company Negative News
- DII holdings decreased (-0.11%), showing reduced domestic institutional support.
- MACD negative (-348) suggests bearish short-term trend.
Company Positive News
- Quarterly PAT improved from 366 Cr. to 415 Cr.
- FII holdings increased slightly (+0.03%), reflecting foreign confidence.
- EPS of 710 ₹ supports valuation strength.
Industry
- Industry P/E is 29.1, highlighting Abbott India’s premium valuation.
- Pharmaceutical sector has strong long-term demand potential driven by healthcare growth in India.
Conclusion
✅ Abbott India is a fundamentally strong company with excellent ROE/ROCE, low debt, and consistent dividend payouts. While valuations are slightly stretched, the company’s profitability supports long-term investment. Ideal entry is around 26,000–27,000 ₹. Existing holders should maintain positions for 3–5 years, with partial profit booking near 36,000–37,000 ₹ resistance.