AIIL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | AIIL | Market Cap | 42,695 Cr. | Current Price | 503 ₹ | High / Low | 684 ₹ |
| Stock P/E | 10.6 | Book Value | 191 ₹ | Dividend Yield | 0.04 % | ROCE | 30.8 % |
| ROE | 34.1 % | Face Value | 1.00 ₹ | DMA 50 | 565 ₹ | DMA 200 | 530 ₹ |
| Chg in FII Hold | 0.37 % | Chg in DII Hold | -0.07 % | PAT Qtr | 765 Cr. | PAT Prev Qtr | 941 Cr. |
| RSI | 37.6 | MACD | -23.2 | Volume | 2,13,390 | Avg Vol 1Wk | 3,28,170 |
| Low price | 265 ₹ | High price | 684 ₹ | PEG Ratio | 0.12 | Debt to equity | 0.17 |
| 52w Index | 56.8 % | Qtr Profit Var | -9.38 % | EPS | 47.3 ₹ | Industry PE | 18.9 |
📊 Analysis: AIIL demonstrates strong fundamentals with ROCE at 30.8% and ROE at 34.1%, reflecting excellent capital efficiency and shareholder returns. The stock trades at a P/E of 10.6, which is significantly lower than the industry average of 18.9, suggesting undervaluation. The PEG ratio of 0.12 indicates attractive growth relative to price. Debt-to-equity is low at 0.17, ensuring financial stability. However, dividend yield is negligible at 0.04%, limiting income potential. Technical indicators (RSI 37.6, MACD negative) suggest oversold conditions and possible near-term weakness, but long-term fundamentals remain strong.
💰 Entry Price Zone: Ideal entry would be in the ₹450 – ₹480 range, closer to its support levels and below DMA 200 (₹530), offering better risk-reward alignment.
⏳ Exit Strategy / Holding Period: For existing holders, a long-term horizon (3–5 years) is advisable given strong ROE/ROCE and undervaluation. Consider partial profit booking near ₹670–₹680 (52-week high zone) if valuations stretch, while maintaining core holdings for compounding benefits.
✅ Positive
- High ROCE (30.8%) and ROE (34.1%) show strong efficiency and profitability.
- Low P/E (10.6) compared to industry average (18.9) indicates undervaluation.
- PEG ratio of 0.12 highlights attractive growth potential.
- Debt-to-equity ratio of 0.17 ensures financial resilience.
- FII holdings increased (+0.37%), showing foreign investor confidence.
⚠️ Limitation
- Dividend yield of 0.04% is unattractive for income-focused investors.
- Quarterly PAT declined from 941 Cr. to 765 Cr., showing earnings pressure.
- DII holdings slightly reduced (-0.07%), reflecting cautious domestic sentiment.
- Technical indicators (RSI 37.6, MACD negative) suggest short-term weakness.
📉 Company Negative News
- Recent quarterly profit decline (-9.38%) raises concerns about near-term growth momentum.
📈 Company Positive News
- Strong EPS of ₹47.3 supports long-term earnings visibility.
- Foreign institutional investors increased holdings, reflecting confidence in fundamentals.
🏭 Industry
- Sector trades at an average P/E of 18.9, higher than AIIL’s valuation, highlighting relative undervaluation.
- Industry outlook remains positive with steady demand and growth opportunities.
🔎 Conclusion
AIIL is a fundamentally strong and undervalued stock with excellent ROE and ROCE. Long-term investors can accumulate in the ₹450–₹480 range for superior compounding potential. Existing holders should maintain a 3–5 year horizon, with partial profit booking near highs, while retaining core holdings for long-term growth.