EMAMILTD - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | EMAMILTD | Market Cap | 21,360 Cr. | Current Price | 489 ₹ | High / Low | 655 ₹ |
| Stock P/E | 24.4 | Book Value | 71.8 ₹ | Dividend Yield | 1.64 % | ROCE | 34.0 % |
| ROE | 31.5 % | Face Value | 1.00 ₹ | DMA 50 | 511 ₹ | DMA 200 | 551 ₹ |
| Chg in FII Hold | -1.90 % | Chg in DII Hold | 1.72 % | PAT Qtr | 339 Cr. | PAT Prev Qtr | 182 Cr. |
| RSI | 42.9 | MACD | -9.93 | Volume | 31,80,085 | Avg Vol 1Wk | 8,42,020 |
| Low price | 470 ₹ | High price | 655 ₹ | PEG Ratio | 30.9 | Debt to equity | 0.01 |
| 52w Index | 10.4 % | Qtr Profit Var | 21.3 % | EPS | 19.8 ₹ | Industry PE | 46.7 |
📊 Analysis: EMAMILTD shows strong fundamentals for long-term investment. ROCE (34.0%) and ROE (31.5%) highlight excellent capital efficiency and profitability. EPS of 19.8 ₹ is healthy, and debt-to-equity at 0.01 reflects a virtually debt-free balance sheet. The P/E ratio (24.4) is significantly below the industry average (46.7), suggesting undervaluation. Dividend yield of 1.64% provides steady shareholder returns. However, PEG ratio of 30.9 indicates growth is priced expensively, which is a limitation. Technically, the stock is trading below DMA 50 (511 ₹) and DMA 200 (551 ₹), with RSI at 42.9 and MACD negative, suggesting near-term weakness but long-term accumulation potential.
💰 Ideal Entry Zone: 470 ₹ – 490 ₹ (close to 52-week low and current support levels, offering margin of safety).
📈 Exit / Holding Strategy: For long-term investors, holding is recommended given strong ROE, ROCE, and dividend yield. If already holding, maintain positions with a 3–5 year horizon. Exit strategy: consider partial profit booking near 640–655 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- Strong ROCE (34.0%) and ROE (31.5%) indicate efficient capital deployment.
- P/E ratio (24.4) below industry average (46.7), suggesting undervaluation.
- Debt-to-equity ratio of 0.01 shows virtually debt-free operations.
- Dividend yield of 1.64% provides steady shareholder returns.
Limitation
- PEG ratio of 30.9 indicates growth is priced expensively.
- Stock trading below DMA 50 & 200, showing weak near-term momentum.
- RSI at 42.9 suggests oversold but still weak technical strength.
Company Negative News
- Decline in FII holdings (-1.90%), showing reduced foreign investor confidence.
- Technical weakness with MACD negative.
Company Positive News
- Quarterly PAT improved significantly (339 Cr. vs 182 Cr.).
- DII holdings increased (+1.72%), showing strong domestic institutional support.
Industry
- Industry PE at 46.7, higher than company’s valuation, suggesting EMAMILTD is undervalued compared to peers.
- FMCG sector benefits from steady demand and brand strength, offering long-term growth visibility.
Conclusion
✅ EMAMILTD is a strong candidate for long-term investment, supported by excellent ROE, ROCE, low debt, and attractive dividend yield. Ideal entry zone is 470–490 ₹ for margin of safety. Investors should hold for 3–5 years to benefit from compounding growth, with partial exits near 640–655 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with FMCG sector peers (like Dabur, Marico, Godrej Consumer) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?