AUROPHARMA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.4
| Stock Code | AUROPHARMA | Market Cap | 70,216 Cr. | Current Price | 1,209 ₹ | High / Low | 1,279 ₹ |
| Stock P/E | 34.7 | Book Value | 369 ₹ | Dividend Yield | 0.33 % | ROCE | 10.8 % |
| ROE | 8.65 % | Face Value | 1.00 ₹ | DMA 50 | 1,178 ₹ | DMA 200 | 1,163 ₹ |
| Chg in FII Hold | -0.26 % | Chg in DII Hold | 0.06 % | PAT Qtr | 581 Cr. | PAT Prev Qtr | 559 Cr. |
| RSI | 56.9 | MACD | 0.83 | Volume | 14,10,968 | Avg Vol 1Wk | 25,96,589 |
| Low price | 994 ₹ | High price | 1,279 ₹ | PEG Ratio | 8.14 | Debt to equity | 0.21 |
| 52w Index | 75.5 % | Qtr Profit Var | 8.16 % | EPS | 34.8 ₹ | Industry PE | 29.1 |
📊 Analysis: AUROPHARMA has moderate fundamentals with ROCE at 10.8% and ROE at 8.65%, which are below ideal levels for long-term compounding. The stock trades at a P/E of 34.7, higher than the industry average of 29.1, suggesting overvaluation. The PEG ratio of 8.14 indicates expensive growth relative to earnings. Dividend yield is modest at 0.33%, offering limited income. Debt-to-equity is manageable at 0.21, showing moderate leverage. Technical indicators (RSI 56.9, MACD slightly positive) suggest neutral to mildly bullish momentum.
💰 Entry Price Zone: Ideal entry would be in the ₹1,000 – ₹1,080 range, closer to its 52-week low of ₹994, 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 ₹1,250–₹1,280 (52-week high zone) unless ROE/ROCE improve significantly. Long-term holding should depend on sustained earnings growth and margin expansion.
✅ Positive
- Consistent quarterly profit growth (PAT up from 559 Cr. to 581 Cr.).
- EPS of ₹34.8 provides earnings visibility.
- DII holdings increased (+0.06%), showing domestic institutional support.
- Debt-to-equity ratio of 0.21 indicates manageable leverage.
⚠️ Limitation
- ROCE (10.8%) and ROE (8.65%) are relatively weak compared to peers.
- High P/E (34.7) compared to industry average (29.1).
- PEG ratio of 8.14 signals expensive growth.
- Dividend yield of 0.33% is unattractive for income investors.
- FII holdings reduced (-0.26%), showing cautious foreign sentiment.
📉 Company Negative News
- No major negative news reported, but valuation concerns persist.
- Profit growth is modest, limiting upside potential.
📈 Company Positive News
- Quarterly profit variation of 8.16% YoY indicates steady business momentum.
- Technical support around DMA 200 (₹1,163) provides stability.
🏭 Industry
- Pharma sector trades at an average P/E of 29.1, lower than AUROPHARMA’s valuation.
- Industry outlook remains positive with steady demand and global expansion opportunities.
🔎 Conclusion
AUROPHARMA is financially stable but currently overvalued with modest profitability metrics. Long-term investors should wait for a correction towards ₹1,000–₹1,080 before entering. Existing holders may adopt a medium-term horizon and consider profit booking near highs unless earnings growth improves significantly.