CRISIL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.5
| Stock Code | CRISIL | Market Cap | 34,280 Cr. | Current Price | 4,690 ₹ | High / Low | 6,330 ₹ |
| Stock P/E | 51.3 | Book Value | 271 ₹ | Dividend Yield | 0.53 % | ROCE | 39.0 % |
| ROE | 36.5 % | Face Value | 1.00 ₹ | DMA 50 | 4,606 ₹ | DMA 200 | 4,812 ₹ |
| Chg in FII Hold | -0.14 % | Chg in DII Hold | -0.08 % | PAT Qtr | 137 Cr. | PAT Prev Qtr | 194 Cr. |
| RSI | 53.5 | MACD | 50.8 | Volume | 51,948 | Avg Vol 1Wk | 64,702 |
| Low price | 3,894 ₹ | High price | 6,330 ₹ | PEG Ratio | 4.70 | Debt to equity | 0.12 |
| 52w Index | 32.7 % | Qtr Profit Var | -31.7 % | EPS | 91.3 ₹ | Industry PE | 34.0 |
🔍 Analysis: CRISIL demonstrates strong efficiency metrics with ROCE at 39% and ROE at 36.5%, supported by EPS of 91.3 ₹. Debt-to-equity is very low (0.12), reflecting a healthy balance sheet. However, the stock trades at a high P/E of 51.3 compared to the industry average of 34.0, suggesting stretched valuations. Dividend yield is modest at 0.53%. PEG ratio of 4.70 indicates overvaluation relative to growth. Quarterly PAT declined (137 Cr vs 194 Cr), showing earnings pressure. Current price (4,690 ₹) is near DMA supports (50 DMA at 4,606 ₹, 200 DMA at 4,812 ₹), reflecting stability but limited upside compared to its 52-week high (6,330 ₹).
💡 Entry Zone: Ideal entry would be in the 4,300–4,500 ₹ range, aligning with valuation comfort and DMA supports. Deeper accumulation possible near 3,900–4,000 ₹ for margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain position for 2–4 years given strong ROE/ROCE and low debt. Consider partial exit near 6,100–6,300 ₹ resistance if valuations stretch further without earnings recovery. Long-term investors should monitor PEG ratio and quarterly profit trends for sustained compounding.
🌟 Positive
- Strong ROCE (39%) and ROE (36.5%)
- EPS at 91.3 ₹ supports earnings strength
- Low debt-to-equity (0.12), excellent balance sheet
- Stable trading near DMA supports
⚠️ Limitation
- High P/E (51.3 vs industry 34.0)
- PEG ratio (4.70) signals overvaluation
- Dividend yield modest (0.53%)
- Quarterly PAT declined (137 Cr vs 194 Cr)
- FII (-0.14%) and DII (-0.08%) holdings reduced
📉 Company Negative News
- Profit decline in recent quarter (-31.7% variation)
- Institutional investors trimmed holdings
📈 Company Positive News
- Strong efficiency metrics (ROE, ROCE)
- EPS performance supports valuation comfort
- Debt levels remain very low
🏭 Industry
- Industry PE at 34.0, lower than CRISIL’s valuation
- Financial services and rating sector benefits from regulatory demand and credit market expansion
✅ Conclusion
CRISIL is a moderate candidate for long-term investment. Strong ROE, ROCE, and low debt support fundamentals, but high P/E, PEG ratio, and profit decline limit valuation comfort. Ideal entry is near 4,300–4,500 ₹ for margin of safety. Existing holders should maintain for 2–4 years, with partial exit near 6,100–6,300 ₹ resistance if valuations outpace earnings recovery.