ATUL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | ATUL | Market Cap | 18,616 Cr. | Current Price | 6,327 ₹ | High / Low | 7,793 ₹ |
| Stock P/E | 36.0 | Book Value | 1,973 ₹ | Dividend Yield | 0.40 % | ROCE | 11.9 % |
| ROE | 8.64 % | Face Value | 10.0 ₹ | DMA 50 | 6,025 ₹ | DMA 200 | 6,261 ₹ |
| Chg in FII Hold | -0.86 % | Chg in DII Hold | 0.46 % | PAT Qtr | 121 Cr. | PAT Prev Qtr | 172 Cr. |
| RSI | 60.4 | MACD | 46.1 | Volume | 13,058 | Avg Vol 1Wk | 32,624 |
| Low price | 4,752 ₹ | High price | 7,793 ₹ | PEG Ratio | -4.45 | Debt to equity | 0.00 |
| 52w Index | 51.8 % | Qtr Profit Var | 30.8 % | EPS | 176 ₹ | Industry PE | 27.4 |
📊 Analysis: ATUL has a strong balance sheet with zero debt and a healthy book value of ₹1,973. However, profitability metrics are modest with ROCE at 11.9% and ROE at 8.64%, which are below ideal levels for long-term compounding. The stock trades at a P/E of 36.0, higher than the industry average of 27.4, suggesting overvaluation. The PEG ratio is negative (-4.45), reflecting weak earnings growth relative to price. Dividend yield is modest at 0.40%, offering limited income. Technical indicators (RSI 60.4, MACD positive) show neutral to mildly bullish momentum.
💰 Entry Price Zone: Ideal entry would be in the ₹5,000 – ₹5,400 range, closer to its 52-week low of ₹4,752, where valuations align better with fundamentals.
⏳ Exit Strategy / Holding Period: For existing holders, a medium-term horizon (2–4 years) is advisable. Consider partial profit booking near ₹7,500–₹7,800 (52-week high zone) unless ROE/ROCE improve significantly. Long-term holding should be contingent on earnings growth recovery.
✅ Positive
- Debt-free company ensures strong financial stability.
- High book value (₹1,973) provides valuation support.
- EPS of ₹176 indicates decent earnings base.
- DII holdings increased (+0.46%), showing domestic confidence.
⚠️ Limitation
- ROCE (11.9%) and ROE (8.64%) are relatively weak.
- High P/E (36.0) compared to industry average (27.4).
- Negative PEG ratio (-4.45) signals poor growth relative to valuation.
- Quarterly PAT declined from 172 Cr. to 121 Cr., showing earnings pressure.
- FII holdings reduced (-0.86%), reflecting foreign investor caution.
📉 Company Negative News
- Recent quarterly profit decline raises concerns about growth momentum.
- Valuation remains stretched despite moderate earnings.
📈 Company Positive News
- Debt-free balance sheet provides resilience in volatile markets.
- Stable dividend payout (0.40%) adds shareholder value.
🏭 Industry
- Chemicals sector trades at an average P/E of 27.4, lower than ATUL’s valuation.
- Industry outlook remains steady with demand from specialty chemicals and exports.
🔎 Conclusion
ATUL is financially stable but currently overvalued with modest profitability metrics. Long-term investors should wait for a correction towards ₹5,000–₹5,400 before entering. Existing holders may adopt a medium-term horizon and consider profit booking near highs unless earnings growth improves significantly.