DCMSHRIRAM - Investment Analysis: Buy Signal or Bull Trap?
Last Updated Time : 20 Dec 25, 07:05 am
Back to Investment ListInvestment Rating: 2.9
| Stock Code | DCMSHRIRAM | Market Cap | 18,885 Cr. | Current Price | 1,211 ₹ | High / Low | 1,502 ₹ |
| Stock P/E | 27.4 | Book Value | 464 ₹ | Dividend Yield | 0.74 % | ROCE | 10.8 % |
| ROE | 8.07 % | Face Value | 2.00 ₹ | DMA 50 | 1,231 ₹ | DMA 200 | 1,198 ₹ |
| Chg in FII Hold | -0.17 % | Chg in DII Hold | 0.20 % | PAT Qtr | 168 Cr. | PAT Prev Qtr | 96.7 Cr. |
| RSI | 47.8 | MACD | 1.12 | Volume | 47,588 | Avg Vol 1Wk | 65,528 |
| Low price | 903 ₹ | High price | 1,502 ₹ | PEG Ratio | -1.46 | Debt to equity | 0.30 |
| 52w Index | 51.4 % | Qtr Profit Var | 242 % | EPS | 44.2 ₹ | Industry PE | 23.7 |
📊 Analysis: DCMSHRIRAM shows moderate fundamentals with ROE at 8.07% and ROCE at 10.8%, both below ideal compounding thresholds. Valuation is slightly above industry average (P/E 27.4 vs industry 23.7), suggesting limited margin of safety. Dividend yield at 0.74% is modest, while debt-to-equity at 0.30 indicates manageable leverage. EPS at 44.2 ₹ is decent, but PEG ratio (-1.46) highlights weak growth prospects. Technicals show RSI at 47.8 (neutral), MACD slightly positive (1.12), and price near both 50 DMA (1,231 ₹) and 200 DMA (1,198 ₹), indicating consolidation. Quarterly PAT growth (168 Cr. vs 96.7 Cr.) is strong, but overall profit variance is volatile.
💡 Entry Zone: Ideal entry would be in the 1,050–1,150 ₹ range, closer to valuation comfort and support levels. Current price (1,211 ₹) is slightly above fair entry zone, making patience advisable for better risk-reward.
📈 Exit Strategy: If already holding, consider medium-term holding (12–18 months) with partial exit near 1,350–1,400 ₹ resistance. Long-term holding is not favorable unless ROE improves above 12–15% and earnings growth stabilizes. Tactical holding is recommended rather than multi-year compounding.
Positive
- 📌 EPS at 44.2 ₹ reflects reasonable profitability
- 📌 Dividend yield of 0.74% provides modest shareholder returns
- 📌 Debt-to-equity at 0.30 indicates manageable leverage
- 📌 Quarterly PAT growth from 96.7 Cr. to 168 Cr. (+242%)
Limitation
- ⚠️ Weak ROE (8.07%) and ROCE (10.8%) below compounding thresholds
- ⚠️ Valuation premium: P/E 27.4 vs industry 23.7
- ⚠️ Negative PEG (-1.46) highlights poor growth outlook
- ⚠️ RSI at 47.8 shows neutral momentum
Company Negative News
- ❌ FII holding decreased (-0.17%)
- ❌ Profitability metrics remain weak despite PAT growth
Company Positive News
- ✅ DII holding increased (+0.20%)
- ✅ Quarterly PAT rebound shows operational recovery
Industry
- 🏦 Industry PE at 23.7, sector moderately valued
- 🏦 Chemicals and agribusiness sector faces cyclical demand and margin pressures
Conclusion
🔎 DCMSHRIRAM is moderately attractive for tactical investment but lacks strong long-term compounding potential. Entry near 1,050–1,150 ₹ offers margin of safety. Existing holders can maintain positions for 12–18 months, targeting exits near 1,350–1,400 ₹ unless ROE and growth metrics improve. Long-term holding is not recommended without significant improvement in profitability and growth trajectory.
Would you like me to extend this into a peer benchmarking overlay comparing DCMSHRIRAM against other chemical/agri players like UPL, Rallis India, and Deepak Fertilisers to highlight relative valuation comfort zones?
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