ABCAPITAL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | ABCAPITAL | Market Cap | 90,700 Cr. | Current Price | 346 ₹ | High / Low | 369 ₹ |
| Stock P/E | 30.3 | Book Value | 103 ₹ | Dividend Yield | 0.00 % | ROCE | 9.48 % |
| ROE | 12.5 % | Face Value | 10.0 ₹ | DMA 50 | 345 ₹ | DMA 200 | 298 ₹ |
| Chg in FII Hold | -0.95 % | Chg in DII Hold | 1.85 % | PAT Qtr | 749 Cr. | PAT Prev Qtr | 916 Cr. |
| RSI | 48.9 | MACD | -3.10 | Volume | 1,04,48,367 | Avg Vol 1Wk | 76,04,585 |
| Low price | 149 ₹ | High price | 369 ₹ | PEG Ratio | 0.29 | Debt to equity | 4.56 |
| 52w Index | 89.7 % | Qtr Profit Var | 22.1 % | EPS | 11.4 ₹ | Industry PE | 23.5 |
📊 Aditya Birla Capital (ABCAPITAL) trades at a premium valuation (P/E 30.3 vs industry 23.5), supported by moderate profitability metrics (ROE 12.5%, ROCE 9.48%). The PEG ratio of 0.29 suggests the stock is undervalued relative to growth, which is a positive sign. However, the debt-to-equity ratio is high (4.56), reflecting significant leverage typical of financial services but adding risk. Dividend yield is nil (0.00%), limiting income returns. Quarterly PAT declined sequentially (749 Cr. vs 916 Cr.), though YoY growth (+22.1%) shows earnings momentum. Technical indicators show neutral sentiment (RSI 48.9, MACD negative), with the stock trading near its 50 DMA and above its 200 DMA, indicating medium-term strength.
💡 Ideal Entry Price Zone: 310 ₹ – 330 ₹, closer to long-term support and valuation comfort. Current price (346 ₹) is slightly above fair entry levels.
📌 Exit Strategy / Holding Period: If already holding, maintain a medium-term horizon (2–4 years) given growth visibility in financial services. Partial profit booking can be considered near 360–370 ₹ resistance. Long-term investors should hold only if expecting sustained improvement in ROE/ROCE and reduction in leverage.
Positive
- PEG ratio (0.29) indicates undervaluation relative to growth.
- ROE of 12.5% shows decent profitability.
- DII holdings increased (+1.85%), reflecting strong domestic institutional support.
- Stock trading above 200 DMA (298 ₹) shows medium-term strength.
Limitation
- High debt-to-equity ratio (4.56) adds financial risk.
- Dividend yield is nil (0.00%), offering no income return.
- ROCE at 9.48% is modest compared to peers.
- P/E ratio (30.3) is above industry average (23.5).
Company Negative News
- Quarterly PAT declined sequentially (916 Cr. to 749 Cr.).
- FII holdings decreased (-0.95%), showing reduced foreign investor confidence.
- MACD negative (-3.10) suggests weak short-term momentum.
Company Positive News
- YoY PAT growth of 22.1% indicates earnings momentum.
- DII holdings increased significantly (+1.85%).
- EPS of 11.4 ₹ supports valuation strength.
Industry
- Industry P/E is 23.5, highlighting ABCAPITAL’s premium valuation.
- Financial services sector has strong long-term demand potential driven by credit expansion and wealth management growth in India.
Conclusion
✅ ABCAPITAL is moderately overvalued but shows growth potential with a favorable PEG ratio. High leverage and modest ROCE limit attractiveness. Ideal entry is around 310–330 ₹. Existing holders should maintain positions for 2–4 years, with partial profit booking near 360–370 ₹ resistance, while monitoring debt levels and profitability improvements.