EIHOTEL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.2
| Stock Code | EIHOTEL | Market Cap | 20,674 Cr. | Current Price | 330 ₹ | High / Low | 435 ₹ |
| Stock P/E | 29.5 | Book Value | 68.6 ₹ | Dividend Yield | 0.45 % | ROCE | 21.9 % |
| ROE | 17.5 % | Face Value | 2.00 ₹ | DMA 50 | 349 ₹ | DMA 200 | 369 ₹ |
| Chg in FII Hold | 0.23 % | Chg in DII Hold | -0.04 % | PAT Qtr | 97.6 Cr. | PAT Prev Qtr | 134 Cr. |
| RSI | 45.7 | MACD | -9.76 | Volume | 1,55,551 | Avg Vol 1Wk | 2,53,498 |
| Low price | 293 ₹ | High price | 435 ₹ | PEG Ratio | 0.28 | Debt to equity | 0.04 |
| 52w Index | 26.0 % | Qtr Profit Var | -15.8 % | EPS | 11.0 ₹ | Industry PE | 31.0 |
📊 Analysis: EIHOTEL demonstrates strong fundamentals for long-term investment. ROCE (21.9%) and ROE (17.5%) indicate efficient capital usage and profitability. The P/E ratio (29.5) is aligned with the industry average (31.0), suggesting fair valuation. PEG ratio of 0.28 highlights attractive growth potential relative to earnings. Debt-to-equity is very low (0.04), reflecting a strong balance sheet. Dividend yield at 0.45% adds minor income support. Technicals show price below DMA 50 & 200 with RSI at 45.7 and negative MACD, suggesting near-term weakness but long-term accumulation potential.
💰 Ideal Entry Zone: 300 ₹ – 320 ₹ (close to 52-week low and below DMA levels, offering margin of safety).
📈 Exit / Holding Strategy: For long-term investors, holding is recommended given strong ROE, ROCE, and PEG ratio. If already holding, maintain positions with a horizon of 3–5 years. Exit strategy: consider partial profit booking near 420–435 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- Strong ROCE (21.9%) and ROE (17.5%) indicate efficient capital deployment.
- PEG ratio of 0.28 highlights undervaluation relative to growth.
- Low debt-to-equity (0.04) ensures financial stability.
- Dividend yield of 0.45% provides minor shareholder returns.
Limitation
- Quarterly profit declined (PAT 97.6 Cr. vs 134 Cr.), showing short-term pressure.
- Price trading below DMA 50 & 200, indicating weak near-term momentum.
- Volume lower than 1-week average, suggesting reduced trading interest.
Company Negative News
- Quarterly profit variation -15.8%, reflecting slowdown in earnings.
- Slight decline in DII holdings (-0.04%), showing reduced domestic institutional support.
Company Positive News
- FII holdings increased (+0.23%), showing foreign investor confidence.
- Consistent profitability with EPS at 11.0 ₹.
Industry
- Industry PE at 31.0, aligned with company valuation, suggesting fair pricing.
- Hospitality sector benefits from tourism recovery and premium hotel demand.
Conclusion
✅ EIHOTEL is a good candidate for long-term investment, supported by strong ROE, ROCE, low debt, and attractive PEG ratio. Ideal entry zone is 300–320 ₹ for margin of safety. Investors should hold for 3–5 years to benefit from compounding growth, with partial exits near 420–435 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with other hospitality stocks (like Indian Hotels, Chalet Hotels, Lemon Tree) so you can compare relative strength and margin-of-safety positioning for sector rotation?