DCMSHRIRAM - Investment Analysis

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

Investment Rating: 3.0

🧪 Fundamental Analysis: DCM Shriram Ltd. (DCMSHRIRAM)

DCM Shriram is a diversified industrial company with exposure to chemicals, sugar, and agri-inputs. While it has shown decent profitability and financial stability, its valuation and capital efficiency metrics suggest limited upside for long-term investors at current levels.

Metric Value Implication

P/E Ratio 35.9 Overvalued vs. industry average of 24.9

PEG Ratio -2.04 Negative PEG indicates earnings contraction or volatility

ROCE / ROE 11.4% / 8.66% Below ideal for long-term compounding

Dividend Yield 0.63% Low; not attractive for income investors

Debt-to-Equity 0.36 Moderate; manageable but not ideal

EPS ₹39.6 Reasonable earnings base

Qtr Profit Var +13.0% Mild growth; not high momentum

FII/DII Holding Change +0.04% / +0.28% Slight institutional accumulation; neutral sentiment

📉 Technical Analysis

Current Price: ₹1,422

DMA 50 / DMA 200: ₹1,265 / ₹1,130 → Trading above both; bullish trend

RSI: 63.8 → Approaching overbought zone

MACD: +53.4 → Bullish momentum

Volume: Below average; low conviction in recent move

💰 Ideal Entry Price Zone

₹1,250–₹1,300

This range offers a better margin of safety and aligns with DMA support

Avoid fresh entry above ₹1,450 unless ROCE improves and PEG normalizes

📈 Long-Term Investment Outlook

Strengths

Diversified business model — reduces sector-specific risk

Reasonable EPS and consistent profitability

Moderate debt — financially stable

Recent profit growth — signs of recovery

Risks

PEG < 0 — earnings volatility or poor growth visibility

ROCE and ROE below 12% — weak long-term compounding potential

RSI near overbought — short-term correction possible

P/E above industry average — valuation stretched

DCM Shriram is a moderate-quality industrial stock, suitable for tactical exposure but not ideal for long-term wealth creation unless capital efficiency improves.

🏁 Exit Strategy / Holding Period

If you already hold DCMSHRIRAM

Holding Period: 1–2 years with close monitoring of quarterly results

Exit Strategy

Consider trimming near ₹1,480–₹1,500 (recent high)

Reassess if ROCE stays below 12% and PEG remains negative

Hold only if earnings stabilize and margin expansion continues

Would you like a comparison with peers like Deepak Fertilizers, UPL, or Tata Chemicals to explore stronger diversified industrial plays?

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