ESCORTS - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | ESCORTS | Market Cap | 40,076 Cr. | Current Price | 3,590 ₹ | High / Low | 4,180 ₹ |
| Stock P/E | 33.1 | Book Value | 1,064 ₹ | Dividend Yield | 0.78 % | ROCE | 13.7 % |
| ROE | 12.8 % | Face Value | 10.0 ₹ | DMA 50 | 3,633 ₹ | DMA 200 | 3,567 ₹ |
| Chg in FII Hold | -0.02 % | Chg in DII Hold | 0.40 % | PAT Qtr | 321 Cr. | PAT Prev Qtr | 315 Cr. |
| RSI | 50.1 | MACD | -57.0 | Volume | 3,11,226 | Avg Vol 1Wk | 2,11,968 |
| Low price | 2,776 ₹ | High price | 4,180 ₹ | PEG Ratio | 1.75 | Debt to equity | 0.01 |
| 52w Index | 58.0 % | Qtr Profit Var | 6.12 % | EPS | 209 ₹ | Industry PE | 33.6 |
📊 Analysis: ESCORTS shows moderate fundamentals for long-term investment. ROCE (13.7%) and ROE (12.8%) indicate average capital efficiency compared to industry leaders. EPS of 209 ₹ is strong, and debt-to-equity at 0.01 reflects a virtually debt-free balance sheet. The P/E ratio (33.1) is aligned with the industry average (33.6), suggesting fair valuation. Dividend yield of 0.78% provides minor shareholder returns. PEG ratio of 1.75 indicates growth is priced at a premium. Technically, the stock is trading near DMA 50 (3,633 ₹) and DMA 200 (3,567 ₹), with RSI at 50.1 (neutral) and MACD negative, suggesting consolidation and sideways momentum.
💰 Ideal Entry Zone: 3,300 ₹ – 3,450 ₹ (near DMA support levels, offering margin of safety below current price).
📈 Exit / Holding Strategy: For long-term investors, cautious holding is recommended given fair valuation and stable fundamentals. If already holding, maintain positions with a 3–5 year horizon. Exit strategy: consider partial profit booking near 4,100–4,180 ₹ (52-week high zone) if valuations stretch, but retain core holdings for compounding growth.
Positive
- EPS of 209 ₹ reflects strong profitability.
- Debt-to-equity ratio of 0.01 shows virtually debt-free operations.
- DII holdings increased (+0.40%), showing domestic institutional support.
- Quarterly PAT growth (321 Cr. vs 315 Cr.) shows earnings stability.
Limitation
- ROCE (13.7%) and ROE (12.8%) are moderate compared to sector leaders.
- PEG ratio of 1.75 suggests growth is priced expensively.
- Dividend yield of 0.78% offers limited shareholder returns.
- MACD negative, indicating weak near-term momentum.
Company Negative News
- Decline in FII holdings (-0.02%), showing reduced foreign investor confidence.
- Technical weakness with price struggling around DMA levels.
Company Positive News
- Quarterly profit variation +6.12%, showing steady earnings growth.
- DII holdings increased, reflecting domestic institutional confidence.
Industry
- Industry PE at 33.6, aligned with company’s valuation, suggesting fair pricing.
- Agri-machinery and tractor sector benefits from rural demand and government support for agriculture.
Conclusion
⚠️ ESCORTS is a moderate candidate for long-term investment. Strong EPS and debt-free balance sheet are positives, but average ROE/ROCE and premium PEG ratio limit attractiveness. Ideal entry zone is 3,300–3,450 ₹ for margin of safety. Investors should hold for 3–5 years, with partial exits near 4,100–4,180 ₹ if valuations peak.
Selva, would you like me to extend this into a peer benchmarking overlay with tractor and agri-machinery peers (like M&M, VST Tillers, TAFE) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?