CHENNPETRO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | CHENNPETRO | Market Cap | 13,126 Cr. | Current Price | 881 ₹ | High / Low | 1,103 ₹ |
| Stock P/E | 6.21 | Book Value | 574 ₹ | Dividend Yield | 0.57 % | ROCE | 4.04 % |
| ROE | 2.10 % | Face Value | 10.0 ₹ | DMA 50 | 858 ₹ | DMA 200 | 795 ₹ |
| Chg in FII Hold | 4.07 % | Chg in DII Hold | -1.58 % | PAT Qtr | 987 Cr. | PAT Prev Qtr | 732 Cr. |
| RSI | 55.4 | MACD | 0.36 | Volume | 19,19,204 | Avg Vol 1Wk | 15,97,776 |
| Low price | 433 ₹ | High price | 1,103 ₹ | PEG Ratio | -0.13 | Debt to equity | 0.23 |
| 52w Index | 66.9 % | Qtr Profit Var | 9,338 % | EPS | 142 ₹ | Industry PE | 10.0 |
📊 Analysis: CHENNPETRO trades at a low P/E of 6.21 compared to industry average of 10, suggesting undervaluation. EPS of 142 ₹ is strong, and quarterly PAT surged (987 Cr. vs 732 Cr.), showing robust earnings momentum. ROE (2.10%) and ROCE (4.04%) are weak, reflecting poor efficiency despite profitability. Dividend yield of 0.57% is modest. Debt-to-equity at 0.23 is manageable, supporting balance sheet stability. Technicals show price above DMA 50 (858 ₹) and DMA 200 (795 ₹), with RSI at 55.4 indicating neutral strength and MACD (0.36) showing mild bullishness. PEG ratio (-0.13) reflects distorted valuation due to earnings volatility. Institutional activity is mixed, with FII holdings up (+4.07%) and DII holdings down (-1.58%).
💰 Ideal Entry Zone: Between 850 ₹ – 870 ₹ (near DMA 50 support and valuation comfort). Current price (881 ₹) is slightly above ideal entry, so staggered accumulation is recommended.
📈 Exit / Holding Strategy: For long-term investors already holding, maintain positions cautiously given strong EPS and undervaluation. Exit if price sustains below 795 ₹ (DMA 200) or if ROE/ROCE fail to improve. Holding period: 2–3 years, with periodic review of efficiency metrics and sector demand cycles.
Positive
- Low P/E (6.21) compared to industry average (10)
- EPS of 142 ₹ supports profitability
- Quarterly PAT growth (987 Cr. vs 732 Cr.) shows strong momentum
- Debt-to-equity ratio of 0.23 indicates manageable leverage
- FII holdings increased (+4.07%), showing foreign confidence
Limitation
- Weak ROE (2.10%) and ROCE (4.04%) indicate poor efficiency
- Dividend yield of 0.57% is modest
- PEG ratio (-0.13) reflects distorted valuation
- DII holdings reduced (-1.58%), showing domestic caution
Company Negative News
- Weak efficiency metrics despite profitability
- DII holdings reduced, reflecting domestic investor caution
Company Positive News
- Quarterly PAT surged significantly (+9,338% variation)
- FII holdings increased (+4.07%), showing foreign investor confidence
Industry
- Industry P/E at 10 shows CHENNPETRO trades at a discount
- Petrochemical sector supported by global demand but cyclical in nature
Conclusion
⚖️ CHENNPETRO is an undervalued stock with strong earnings momentum but weak efficiency metrics. Ideal entry is near 850–870 ₹. Long-term holders should maintain positions for 2–3 years, monitoring ROE, ROCE, and sector demand cycles. Caution is advised due to cyclical nature and modest dividend yield.