DEEPAKFERT - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.0
| Stock Code | DEEPAKFERT | Market Cap | 13,237 Cr. | Current Price | 1,048 ₹ | High / Low | 1,779 ₹ |
| Stock P/E | 41.1 | Book Value | 274 ₹ | Dividend Yield | 0.96 % | ROCE | 14.9 % |
| ROE | 12.3 % | Face Value | 10.0 ₹ | DMA 50 | 1,213 ₹ | DMA 200 | 1,314 ₹ |
| Chg in FII Hold | -0.63 % | Chg in DII Hold | 0.56 % | PAT Qtr | 10.8 Cr. | PAT Prev Qtr | 50.0 Cr. |
| RSI | 35.3 | MACD | -60.8 | Volume | 4,33,654 | Avg Vol 1Wk | 8,56,994 |
| Low price | 888 ₹ | High price | 1,779 ₹ | PEG Ratio | 1.45 | Debt to equity | 0.13 |
| 52w Index | 18.0 % | Qtr Profit Var | -83.9 % | EPS | 25.5 ₹ | Industry PE | 18.2 |
📊 Analysis: Deepak Fertilizers shows moderate fundamentals with ROE at 12.3% and ROCE at 14.9%, reflecting average efficiency. Debt-to-equity is low at 0.13, ensuring financial stability. Dividend yield of 0.96% provides some income support. EPS of 25.5 ₹ supports earnings visibility. However, the stock trades at a high P/E of 41.1 compared to industry average of 18.2, suggesting overvaluation. PEG ratio of 1.45 indicates valuations are stretched relative to growth. Quarterly PAT dropped sharply from 50 Cr. to 10.8 Cr. (-83.9%), raising concerns about earnings consistency. Technicals show weakness with RSI at 35.3 (oversold zone) and MACD negative (-60.8).
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 1,213 ₹, 200 DMA at 1,314 ₹) and support near 888 ₹, the ideal long-term entry zone is 950–1,000 ₹. Current price (1,048 ₹) is close to support, making staggered entry possible.
📈 Exit / Holding Strategy: For existing holders, medium-term holding (2–3 years) is advisable only if earnings stabilize. Exit strategy: consider profit booking near 1,600–1,700 ₹ resistance zone. Long-term holding is not recommended unless ROE improves above 15% and profit growth resumes consistently.
Positive
- ✅ Low debt-to-equity (0.13) ensures financial safety.
- ✅ Dividend yield of 0.96% provides some income support.
- ✅ EPS of 25.5 ₹ supports valuation strength.
- ✅ DII holdings increased (+0.56%), showing domestic institutional confidence.
Limitation
- ⚠️ Weak ROE (12.3%) and ROCE (14.9%).
- ⚠️ High P/E (41.1) compared to industry average (18.2).
- ⚠️ PEG ratio of 1.45 suggests stretched valuations.
- ⚠️ Quarterly PAT decline (-83.9%) raises concerns about earnings stability.
Company Negative News
- 📉 PAT dropped sharply from 50 Cr. to 10.8 Cr.
- 📉 FII holdings decreased (-0.63%), showing reduced foreign confidence.
- 📉 Technical weakness with RSI at 35.3 and MACD at -60.8.
Company Positive News
- 📈 EPS remains stable at 25.5 ₹.
- 📈 DII holdings increased (+0.56%), reflecting domestic support.
Industry
- 🏦 Industry P/E at 18.2 highlights Deepak Fertilizers trades at a steep premium.
- 🏦 Fertilizers and chemicals sector has cyclical demand potential driven by agriculture and industrial growth.
Conclusion
🔎 Deepak Fertilizers is a financially stable company with low debt and modest dividend yield, but weak efficiency metrics, stretched valuations, and sharp profit decline limit its attractiveness for long-term compounding. Ideal entry zone is 950–1,000 ₹. Suitable for medium-term holding (2–3 years), with exit near 1,600–1,700 ₹ resistance unless profitability improves significantly.