ACE - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | ACE | Market Cap | 10,411 Cr. | Current Price | 875 ₹ | High / Low | 1,390 ₹ |
| Stock P/E | 23.9 | Book Value | 149 ₹ | Dividend Yield | 0.23 % | ROCE | 40.1 % |
| ROE | 28.5 % | Face Value | 2.00 ₹ | DMA 50 | 912 ₹ | DMA 200 | 1,049 ₹ |
| Chg in FII Hold | 0.04 % | Chg in DII Hold | -0.07 % | PAT Qtr | 116 Cr. | PAT Prev Qtr | 104 Cr. |
| RSI | 49.4 | MACD | -17.0 | Volume | 3,86,700 | Avg Vol 1Wk | 4,11,206 |
| Low price | 775 ₹ | High price | 1,390 ₹ | PEG Ratio | 0.43 | Debt to equity | 0.08 |
| 52w Index | 16.3 % | Qtr Profit Var | 8.15 % | EPS | 36.5 ₹ | Industry PE | 32.4 |
📊 ACE shows strong fundamentals with excellent ROCE (40.1%) and ROE (28.5%), reflecting efficient capital usage and profitability. The company has very low debt (0.08 D/E), making it financially stable. Valuations are attractive (P/E 23.9 vs industry 32.4), and PEG ratio of 0.43 suggests the stock is undervalued relative to growth. Quarterly PAT growth (+8.15%) indicates steady earnings momentum. Technical indicators show neutral sentiment (RSI 49.4, MACD negative), with the stock trading below its 50 DMA and 200 DMA, suggesting consolidation in the short term.
💡 Ideal Entry Price Zone: 800 ₹ – 850 ₹, closer to long-term support and valuation comfort. Current price (875 ₹) is slightly above this zone but still reasonable for long-term investors.
📌 Exit Strategy / Holding Period: If already holding, maintain a long-term horizon (3–5 years) given strong ROE/ROCE and undervaluation. Partial profit booking can be considered near 1,350–1,390 ₹ resistance. Long-term investors should hold as the company’s fundamentals support compounding returns.
Positive
- High ROCE (40.1%) and ROE (28.5%) show strong efficiency and profitability.
- Low debt-to-equity ratio (0.08) ensures financial stability.
- Valuations attractive (P/E 23.9 vs industry 32.4).
- PEG ratio of 0.43 highlights undervaluation relative to growth.
Limitation
- Dividend yield is modest at 0.23%, limiting income return.
- Stock trading below 200 DMA (1,049 ₹) indicates weak momentum.
- MACD negative (-17.0) suggests bearish short-term trend.
- Quarterly profit growth is steady but not very high (+8.15%).
Company Negative News
- DII holdings decreased (-0.07%), showing reduced domestic institutional support.
- Weak technical indicators (MACD negative, trading below DMA levels).
Company Positive News
- Quarterly PAT improved from 104 Cr. to 116 Cr.
- FII holdings increased slightly (+0.04%), reflecting foreign confidence.
- EPS of 36.5 ₹ supports valuation strength.
Industry
- Industry P/E is 32.4, highlighting ACE’s attractive valuation.
- Construction equipment and engineering sector has strong long-term demand potential driven by infrastructure growth in India.
Conclusion
✅ ACE is a fundamentally strong company with excellent ROE/ROCE, low debt, and attractive valuations. Ideal entry is around 800–850 ₹. Existing holders should maintain positions for 3–5 years, with partial profit booking near 1,350–1,390 ₹ resistance, while monitoring technical momentum for better entry opportunities.