AMBUJACEM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | AMBUJACEM | Market Cap | 1,32,700 Cr. | Current Price | 537 ₹ | High / Low | 625 ₹ |
| Stock P/E | 37.0 | Book Value | 206 ₹ | Dividend Yield | 0.37 % | ROCE | 8.80 % |
| ROE | 8.77 % | Face Value | 2.00 ₹ | DMA 50 | 542 ₹ | DMA 200 | 556 ₹ |
| Chg in FII Hold | -0.11 % | Chg in DII Hold | 0.23 % | PAT Qtr | 227 Cr. | PAT Prev Qtr | 1,571 Cr. |
| RSI | 50.5 | MACD | -7.28 | Volume | 10,76,973 | Avg Vol 1Wk | 32,29,311 |
| Low price | 455 ₹ | High price | 625 ₹ | PEG Ratio | 1.79 | Debt to equity | 0.02 |
| 52w Index | 48.2 % | Qtr Profit Var | -87.1 % | EPS | 13.7 ₹ | Industry PE | 30.8 |
📊 Analysis: AMBUJACEM shows moderate fundamentals. ROE at 8.77% and ROCE at 8.80% are relatively weak, indicating average capital efficiency. Debt-to-equity is very low at 0.02, ensuring financial stability. EPS of ₹13.7 is modest, and dividend yield of 0.37% provides limited income support. The P/E of 37.0 is higher than the industry average of 30.8, suggesting premium valuation. The PEG ratio of 1.79 indicates mild overvaluation relative to growth. Quarterly PAT dropped sharply (-87.1%), raising concerns about earnings consistency. Technicals are weak: MACD negative (-7.28), RSI neutral (50.5), and price below DMA 200, signaling consolidation. Despite strong 52-week index return (48.2%), fundamentals remain cautious.
💡 Entry Price Zone: Ideal accumulation range is between ₹470 – ₹500, closer to the 52-week low, offering better valuation comfort.
⏳ Exit / Holding Strategy: If already holding, maintain a medium-term horizon (2–3 years) but monitor earnings recovery closely. Exit or partial profit booking should be considered near ₹600–₹620 resistance levels if profitability does not improve significantly.
Positive ✅
- Low debt-to-equity (0.02) ensures financial stability.
- Strong 52-week index return of 48.2% shows past performance momentum.
- DII holdings increased by 0.23%, reflecting domestic institutional confidence.
Limitation ⚠️
- Weak ROE (8.77%) and ROCE (8.80%).
- P/E of 37.0 is higher than industry average (30.8).
- Dividend yield of 0.37% is modest.
- Quarterly PAT declined sharply (-87.1%), raising concerns about earnings stability.
- Weak technicals: MACD negative, price below DMA 200.
- FII holdings decreased (-0.11%), showing reduced foreign investor confidence.
Company Negative News 📉
- Sharp decline in quarterly profits (-87.1%) highlights operational weakness.
Company Positive News 📈
- Strong 52-week performance with nearly 48.2% return.
- DII confidence increased with higher holdings.
Industry 🌐
- Industry P/E at 30.8 indicates moderate valuation levels.
- Cement sector benefits from infrastructure growth and housing demand.
Conclusion 📝
AMBUJACEM is a moderately attractive stock with low debt and strong past performance, but faces challenges with weak ROE/ROCE and sharp profit decline. Investors should accumulate near ₹470–₹500 for better risk-adjusted returns. Existing holders should maintain a 2–3 year horizon, with partial profit booking near ₹600–₹620 resistance levels unless profitability metrics improve significantly.