ELECON - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | ELECON | Market Cap | 10,208 Cr. | Current Price | 455 ₹ | High / Low | 717 ₹ |
| Stock P/E | 27.4 | Book Value | 85.8 ₹ | Dividend Yield | 0.44 % | ROCE | 29.1 % |
| ROE | 22.6 % | Face Value | 1.00 ₹ | DMA 50 | 452 ₹ | DMA 200 | 523 ₹ |
| Chg in FII Hold | -0.22 % | Chg in DII Hold | 0.35 % | PAT Qtr | 61.9 Cr. | PAT Prev Qtr | 78.9 Cr. |
| RSI | 58.8 | MACD | -11.3 | Volume | 5,91,223 | Avg Vol 1Wk | 6,90,078 |
| Low price | 348 ₹ | High price | 717 ₹ | PEG Ratio | 0.54 | Debt to equity | 0.12 |
| 52w Index | 29.0 % | Qtr Profit Var | -32.7 % | EPS | 22.5 ₹ | Industry PE | 40.7 |
📊 Analysis: ELECON shows strong fundamentals for long-term investment. ROCE (29.1%) and ROE (22.6%) highlight efficient capital usage and profitability. EPS of 22.5 ₹ is healthy, and debt-to-equity at 0.12 reflects low leverage. The P/E ratio (27.4) is below the industry average (40.7), suggesting undervaluation. PEG ratio of 0.54 indicates attractive growth potential relative to earnings. Dividend yield of 0.44% provides minor shareholder returns. Technically, the stock is near DMA 50 (452 ₹) but below DMA 200 (523 ₹), with RSI at 58.8 (neutral zone) and MACD negative, suggesting consolidation before potential upside.
💰 Ideal Entry Zone: 430 ₹ – 450 ₹ (near DMA 50 support and below current price, 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 3–5 year horizon. Exit strategy: consider partial profit booking near 700–720 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- Strong ROCE (29.1%) and ROE (22.6%) indicate efficient capital deployment.
- PEG ratio of 0.54 highlights undervaluation relative to growth.
- Debt-to-equity ratio of 0.12 shows low leverage.
- P/E ratio (27.4) below industry average (40.7), suggesting fair valuation.
Limitation
- Quarterly PAT declined (61.9 Cr. vs 78.9 Cr.), showing short-term pressure.
- MACD negative, indicating short-term weakness in trend.
- Volume lower than 1-week average, suggesting reduced trading interest.
Company Negative News
- Quarterly profit variation -32.7%, reflecting slowdown in earnings.
- Decline in FII holdings (-0.22%), showing reduced foreign investor confidence.
Company Positive News
- DII holdings increased (+0.35%), showing domestic institutional support.
- Consistent profitability with EPS at 22.5 ₹.
Industry
- Industry PE at 40.7, higher than company’s valuation, suggesting ELECON is undervalued compared to peers.
- Capital goods sector benefits from infrastructure growth and industrial expansion.
Conclusion
✅ ELECON is a good candidate for long-term investment, supported by strong ROE, ROCE, low debt, and attractive PEG ratio. Ideal entry zone is 430–450 ₹ for margin of safety. Investors should hold for 3–5 years to benefit from compounding growth, with partial exits near 700–720 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with other capital goods sector stocks (like Thermax, ABB India, KEC International) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?