BASF - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Rating: 3.4

BASF India Ltd. presents a mixed bag for long-term investors. While its fundamentals are solid, recent earnings volatility and stretched valuations suggest caution. Let’s break it down

🧠 Fundamental Analysis

Valuation

Stock P/E (47.8) vs Industry P/E (34.4) → Overvalued

Price to Book (≈6.0) → Expensive relative to asset base

PEG Ratio: Not provided, but recent profit decline implies poor growth-adjusted valuation

Profitability

ROE (13.4%) and ROCE (17.5%) → Respectable, but not exceptional

EPS (₹111) → Decent earnings base

Qtr Profit Var (-87.1%) → Alarming drop in profitability

Dividend Yield (0.40%) → Low, not ideal for income investors

Debt to Equity (0.05) → Excellent financial health

📉 Technical & Trend Indicators

Current Price (₹5,052) is hovering around DMA 50 (₹5,004) and DMA 200 (₹5,039) → Neutral trend

RSI (50.1) → Mid-range, no strong signal

MACD (-4.71) → Mild bearish momentum

Volume is slightly above average → Moderate interest

🏁 Ideal Entry Price Zone

Based on valuation and technicals

₹4,600–₹4,800 would be a more attractive entry zone

This aligns with support near 52-week low and offers better margin of safety

🧳 Exit Strategy / Holding Period

If you already hold the stock

Holding Period: Minimum 3–5 years, but monitor quarterly results closely

Exit Strategy

Partial exit if price crosses ₹6,500–₹7,000 and valuation remains stretched

Hold if ROE/ROCE improve and earnings stabilize

Reassess if price breaks below ₹4,400 or if profit erosion continues

🔮 Long-Term Outlook

Analysts forecast ₹5,500–₹6,500 targets for FY26, but sentiment remains cautious due to weak Q4 results

1

Machine learning models suggest potential upside to ₹8,000+ by 2027, assuming recovery in margins and demand

2

🧪 Final Verdict

BASF India is a financially sound but currently overvalued specialty chemicals player with volatile earnings. It’s not ideal for aggressive long-term accumulation at current levels, but could be a decent pick if bought near support and held with patience.

Want to compare it with peers like Atul or Tata Chemicals for a broader sector view?

1

cen.acs.org

2

stockpricearchive.com

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