DCMSHRIRAM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.3
| Stock Code | DCMSHRIRAM | Market Cap | 18,220 Cr. | Current Price | 1,170 ₹ | High / Low | 1,502 ₹ |
| Stock P/E | 26.9 | Book Value | 464 ₹ | Dividend Yield | 0.77 % | ROCE | 10.8 % |
| ROE | 8.07 % | Face Value | 2.00 ₹ | DMA 50 | 1,192 ₹ | DMA 200 | 1,195 ₹ |
| Chg in FII Hold | 0.01 % | Chg in DII Hold | 0.07 % | PAT Qtr | 237 Cr. | PAT Prev Qtr | 168 Cr. |
| RSI | 48.4 | MACD | -13.2 | Volume | 31,438 | Avg Vol 1Wk | 33,921 |
| Low price | 903 ₹ | High price | 1,502 ₹ | PEG Ratio | -1.43 | Debt to equity | 0.30 |
| 52w Index | 44.5 % | Qtr Profit Var | -4.77 % | EPS | 41.1 ₹ | Industry PE | 22.9 |
📊 Analysis: DCM Shriram shows modest fundamentals with ROE at 8.07% and ROCE at 10.8%, reflecting below-average efficiency compared to peers. Debt-to-equity is moderate at 0.30, manageable but not negligible. Dividend yield of 0.77% provides limited income support. Current P/E of 26.9 is slightly above industry average (22.9), suggesting mild overvaluation. PEG ratio is negative (-1.43), indicating weak growth prospects relative to valuation. Quarterly PAT declined (-4.77%), raising concerns about earnings consistency. Technicals show neutral momentum with RSI at 48.4 and MACD negative (-13.2).
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 1,192 ₹, 200 DMA at 1,195 ₹) and support near 903 ₹, the ideal entry zone is 1,050–1,120 ₹. Current price (1,170 ₹) is slightly above comfort zone, making staggered entry advisable.
📈 Exit / Holding Strategy: For existing holders, medium-term holding (2–3 years) is advisable if earnings stabilize. Exit strategy: consider profit booking near 1,450–1,500 ₹ resistance zone. Long-term holding is not recommended unless ROE improves above 12% and profit growth resumes consistently.
Positive
- ✅ EPS of 41.1 ₹ provides earnings visibility.
- ✅ Dividend yield of 0.77% adds some investor appeal.
- ✅ FII (+0.01%) and DII (+0.07%) holdings increased slightly, showing institutional stability.
- ✅ Reasonable debt-to-equity (0.30), manageable leverage.
Limitation
- ⚠️ Weak ROE (8.07%) and ROCE (10.8%).
- ⚠️ Negative PEG ratio (-1.43) indicates poor growth prospects.
- ⚠️ Quarterly PAT decline (-4.77%) raises concerns.
- ⚠️ P/E (26.9) is above industry average (22.9), suggesting mild overvaluation.
Company Negative News
- 📉 PAT dropped from 168 Cr. to 237 Cr. but with negative variation (-4.77%).
- 📉 MACD negative (-13.2), indicating weak momentum.
Company Positive News
- 📈 EPS remains strong at 41.1 ₹.
- 📈 Slight increase in institutional holdings (FII/DII).
Industry
- 🏦 Industry P/E at 22.9 suggests DCM Shriram trades at a premium.
- 🏦 Chemicals and agribusiness sector has cyclical demand but requires efficiency improvements for sustained growth.
Conclusion
🔎 DCM Shriram is a moderately stable company with manageable debt and some dividend support, but weak efficiency metrics and negative PEG ratio limit its attractiveness for long-term compounding. Ideal entry zone is 1,050–1,120 ₹. Suitable for medium-term holding (2–3 years), with exit near 1,450–1,500 ₹ resistance unless profitability improves significantly.