DEEPAKNTR - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | DEEPAKNTR | Market Cap | 22,177 Cr. | Current Price | 1,624 ₹ | High / Low | 2,400 ₹ |
| Stock P/E | 104 | Book Value | 232 ₹ | Dividend Yield | 0.46 % | ROCE | 10.1 % |
| ROE | 8.22 % | Face Value | 2.00 ₹ | DMA 50 | 1,630 ₹ | DMA 200 | 1,814 ₹ |
| Chg in FII Hold | -0.15 % | Chg in DII Hold | 0.50 % | PAT Qtr | 112 Cr. | PAT Prev Qtr | 30.3 Cr. |
| RSI | 52.0 | MACD | -2.60 | Volume | 1,29,831 | Avg Vol 1Wk | 1,31,848 |
| Low price | 1,513 ₹ | High price | 2,400 ₹ | PEG Ratio | -5.29 | Debt to equity | 0.01 |
| 52w Index | 12.5 % | Qtr Profit Var | -21.5 % | EPS | 15.6 ₹ | Industry PE | 27.4 |
📊 Analysis: Deepak Nitrite (DEEPAKNTR) shows weak efficiency metrics with ROE at 8.22% and ROCE at 10.1%, far below industry leaders. Debt-to-equity is very low (0.01), reflecting a debt-free balance sheet, which is positive. Dividend yield is modest at 0.46%, offering limited income support. EPS of 15.6 ₹ is relatively low compared to valuation. The stock trades at an extremely high P/E of 104 versus industry average of 27.4, suggesting severe overvaluation. PEG ratio is negative (-5.29), indicating poor growth prospects relative to valuation. Quarterly PAT dropped (-21.5%), raising concerns about earnings consistency. Technicals show neutral momentum with RSI at 52.0 and MACD negative (-2.60).
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 1,630 ₹, 200 DMA at 1,814 ₹) and support near 1,513 ₹, the ideal long-term entry zone is 1,500–1,550 ₹. Current price (1,624 ₹) is above comfort zone, making fresh entry unattractive.
📈 Exit / Holding Strategy: For existing holders, short-to-medium term holding (1–2 years) is advisable to capitalize on momentum. Exit strategy: consider profit booking near 2,350–2,400 ₹ resistance zone. Long-term holding is not recommended unless ROE improves above 12% and earnings growth stabilizes.
Positive
- ✅ Debt-free balance sheet (Debt-to-equity 0.01).
- ✅ EPS of 15.6 ₹ provides earnings visibility.
- ✅ DII holdings increased (+0.50%), reflecting domestic institutional support.
Limitation
- ⚠️ Weak ROE (8.22%) and ROCE (10.1%).
- ⚠️ Extremely high P/E (104) compared to industry average (27.4).
- ⚠️ Negative PEG ratio (-5.29) indicates poor growth prospects.
- ⚠️ Dividend yield (0.46%) is modest.
Company Negative News
- 📉 PAT dropped from 30.3 Cr. to 112 Cr. but with negative variation (-21.5%).
- 📉 FII holdings decreased (-0.15%), showing reduced foreign confidence.
- 📉 MACD negative (-2.60), indicating weak momentum.
Company Positive News
- 📈 EPS remains stable at 15.6 ₹.
- 📈 DII holdings increased (+0.50%), reflecting domestic support.
Industry
- 🏦 Industry P/E at 27.4 highlights DEEPAKNTR trades at a steep premium.
- 🏦 Chemicals sector has long-term demand potential driven by industrial and specialty chemical growth, but efficiency is critical for sustainability.
Conclusion
🔎 Deepak Nitrite is a debt-free company with modest dividend yield, but weak efficiency metrics, stretched valuations, and declining profitability limit its attractiveness for long-term compounding. Ideal entry zone is 1,500–1,550 ₹. Suitable only for short-to-medium term holding, with exit near 2,350–2,400 ₹ unless ROE and profitability improve significantly.