CROMPTON - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.4
| Stock Code | CROMPTON | Market Cap | 15,694 Cr. | Current Price | 244 ₹ | High / Low | 369 ₹ |
| Stock P/E | 31.8 | Book Value | 56.1 ₹ | Dividend Yield | 1.23 % | ROCE | 20.1 % |
| ROE | 16.5 % | Face Value | 2.00 ₹ | DMA 50 | 250 ₹ | DMA 200 | 294 ₹ |
| Chg in FII Hold | -5.01 % | Chg in DII Hold | 4.49 % | PAT Qtr | 85.3 Cr. | PAT Prev Qtr | 125 Cr. |
| RSI | 54.1 | MACD | -6.61 | Volume | 1,00,22,095 | Avg Vol 1Wk | 51,20,266 |
| Low price | 217 ₹ | High price | 369 ₹ | PEG Ratio | -18.4 | Debt to equity | 0.05 |
| 52w Index | 17.6 % | Qtr Profit Var | -30.8 % | EPS | 7.42 ₹ | Industry PE | 49.8 |
📊 Analysis: Crompton Greaves Consumer shows moderate fundamentals with ROE at 16.5% and ROCE at 20.1%, reflecting decent efficiency. Debt-to-equity is very low (0.05), ensuring financial stability. Dividend yield of 1.23% provides some income support. However, the PEG ratio is negative (-18.4), indicating weak growth prospects relative to valuation. Current P/E of 31.8 is below the industry average (49.8), suggesting fair valuation, but quarterly profit decline (-30.8%) raises concerns. Technicals show neutral momentum with RSI at 54.1 and MACD negative (-6.61).
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 250 ₹, 200 DMA at 294 ₹) and support near 217 ₹, the ideal entry zone is 230–245 ₹. This range balances valuation comfort and technical support.
📈 Exit / Holding Strategy: For existing holders, medium-term holding (2–3 years) is advisable if earnings stabilize. Exit strategy: consider profit booking near 360–370 ₹ resistance zone. Long-term holding is viable only if ROE improves above 18% and profit growth resumes consistently.
Positive
- ✅ Strong ROCE (20.1%) and ROE (16.5%).
- ✅ Low debt-to-equity (0.05) ensures financial safety.
- ✅ Dividend yield of 1.23% supports income investors.
- ✅ DII holdings increased (+4.49%), showing domestic institutional confidence.
Limitation
- ⚠️ Negative PEG ratio (-18.4) indicates weak growth prospects.
- ⚠️ Quarterly profit decline (-30.8%) raises concerns.
- ⚠️ Current P/E (31.8) is still high compared to broader market.
Company Negative News
- 📉 PAT dropped from 125 Cr. to 85.3 Cr.
- 📉 FII holdings decreased (-5.01%), showing reduced foreign confidence.
- 📉 MACD negative (-6.61), indicating weak momentum.
Company Positive News
- 📈 EPS of 7.42 ₹ provides earnings visibility.
- 📈 DII holdings increased (+4.49%), reflecting domestic support.
Industry
- 🏦 Industry P/E at 49.8 suggests Crompton trades at a discount.
- 🏦 Consumer electricals sector has long-term demand potential driven by urbanization and housing growth.
Conclusion
🔎 Crompton Greaves Consumer is a financially stable company with decent efficiency metrics and low debt. However, weak profit growth and negative PEG ratio limit its attractiveness for long-term compounding. Ideal entry zone is 230–245 ₹. Suitable for medium-term holding (2–3 years), with exit near 360–370 ₹ resistance unless earnings growth improves.