COROMANDEL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.9
| Stock Code | COROMANDEL | Market Cap | 66,946 Cr. | Current Price | 2,270 ₹ | High / Low | 2,720 ₹ |
| Stock P/E | 30.9 | Book Value | 410 ₹ | Dividend Yield | 0.53 % | ROCE | 24.6 % |
| ROE | 17.5 % | Face Value | 1.00 ₹ | DMA 50 | 2,282 ₹ | DMA 200 | 2,216 ₹ |
| Chg in FII Hold | -0.66 % | Chg in DII Hold | 0.81 % | PAT Qtr | 530 Cr. | PAT Prev Qtr | 816 Cr. |
| RSI | 49.5 | MACD | -12.1 | Volume | 2,22,892 | Avg Vol 1Wk | 2,42,920 |
| Low price | 1,590 ₹ | High price | 2,720 ₹ | PEG Ratio | 3.88 | Debt to equity | 0.05 |
| 52w Index | 60.2 % | Qtr Profit Var | 0.86 % | EPS | 76.1 ₹ | Industry PE | 18.6 |
📊 Analysis: Coromandel International shows solid fundamentals with ROCE at 24.6% and ROE at 17.5%, reflecting decent efficiency. Debt-to-equity is very low (0.05), ensuring financial stability. EPS of 76.1 ₹ provides strong earnings visibility. However, the PEG ratio of 3.88 indicates overvaluation relative to growth, and the current P/E of 30.9 is significantly higher than the industry average of 18.6. Dividend yield is modest at 0.53%, offering limited income support. Technicals show consolidation with RSI at 49.5 and MACD negative (-12.1), suggesting neutral to weak momentum.
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 2,282 ₹, 200 DMA at 2,216 ₹) and support near 1,590 ₹, the ideal long-term entry zone is 2,150–2,200 ₹. This range aligns with valuation comfort and technical support.
📈 Exit / Holding Strategy: For existing holders, Coromandel can be held for 3–4 years given its strong balance sheet and efficiency metrics. Exit strategy: consider partial profit booking near 2,650–2,700 ₹ resistance zone. Long-term holding is viable if ROE remains above 15% and earnings growth stabilizes. If profit margins weaken further, trimming exposure is advisable.
Positive
- ✅ Strong ROCE (24.6%) and decent ROE (17.5%).
- ✅ Debt-to-equity at 0.05 ensures financial safety.
- ✅ EPS of 76.1 ₹ supports earnings visibility.
- ✅ DII holdings increased (+0.81%), showing domestic institutional confidence.
Limitation
- ⚠️ PEG ratio of 3.88 suggests overvaluation relative to growth.
- ⚠️ Current P/E (30.9) is well above industry average (18.6).
- ⚠️ Dividend yield (0.53%) is low, offering limited income support.
Company Negative News
- 📉 Quarterly PAT dropped from 816 Cr. to 530 Cr.
- 📉 FII holdings decreased (-0.66%), showing reduced foreign confidence.
- 📉 MACD negative (-12.1), indicating weak momentum.
Company Positive News
- 📈 EPS remains strong at 76.1 ₹.
- 📈 DII holdings increased (+0.81%), reflecting domestic support.
- 📈 Stable quarterly profit variation (+0.86%) despite PAT decline.
Industry
- 🏦 Industry P/E at 18.6 suggests Coromandel trades at a premium.
- 🏦 Agrochemicals and fertilizers sector has long-term demand driven by agriculture growth and food security needs.
Conclusion
🔎 Coromandel International is a financially stable company with strong efficiency metrics and low debt. However, stretched valuations (high P/E and PEG) limit its attractiveness for fresh long-term entry. Ideal entry zone is 2,150–2,200 ₹. Suitable for medium-to-long-term holding (3–4 years), with exit near 2,650–2,700 ₹ resistance unless earnings growth accelerates.