FACT - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.2
| Stock Code | FACT | Market Cap | 51,788 Cr. | Current Price | 800 ₹ | High / Low | 1,112 ₹ |
| Stock P/E | 3,497 | Book Value | 21.2 ₹ | Dividend Yield | 0.02 % | ROCE | 8.65 % |
| ROE | 1.61 % | Face Value | 10.0 ₹ | DMA 50 | 846 ₹ | DMA 200 | 880 ₹ |
| Chg in FII Hold | 0.00 % | Chg in DII Hold | 0.00 % | PAT Qtr | -67.9 Cr. | PAT Prev Qtr | 20.9 Cr. |
| RSI | 42.9 | MACD | -20.1 | Volume | 74,122 | Avg Vol 1Wk | 1,46,358 |
| Low price | 565 ₹ | High price | 1,112 ₹ | PEG Ratio | -55.5 | Debt to equity | 2.79 |
| 52w Index | 43.0 % | Qtr Profit Var | -949 % | EPS | 0.43 ₹ | Industry PE | 18.6 |
📊 Analysis: FACT shows weak fundamentals for long-term investment. ROCE (8.65%) and ROE (1.61%) are very low, indicating poor capital efficiency. EPS of 0.43 ₹ is negligible, and debt-to-equity at 2.79 reflects high leverage. The P/E ratio (3,497) is extremely inflated compared to the industry average (18.6), suggesting severe overvaluation. Dividend yield of 0.02% offers no meaningful shareholder returns. PEG ratio of -55.5 highlights unsustainable valuation relative to growth. Technically, the stock is trading below DMA 50 (846 ₹) and DMA 200 (880 ₹), with RSI at 42.9 and MACD negative, suggesting bearish momentum.
💰 Ideal Entry Zone: 560 ₹ – 620 ₹ (closer to 52-week low, offering margin of safety and better valuation comfort).
📈 Exit / Holding Strategy: If already holding, consider exiting on rallies near 850–880 ₹ (DMA resistance zone). Long-term holding is not advisable unless ROE and ROCE improve significantly. Current metrics suggest weak growth potential, so capital may be better deployed in stronger peers.
Positive
- Large market cap (51,788 Cr.) provides scale and visibility.
- Debt-to-equity ratio has room for improvement if deleveraging occurs.
- Stable trading volume indicates liquidity in the stock.
Limitation
- Extremely high P/E ratio (3,497) compared to industry average (18.6).
- Low ROCE (8.65%) and ROE (1.61%), showing poor capital efficiency.
- Dividend yield of 0.02% offers negligible shareholder returns.
- PEG ratio of -55.5 highlights valuation concerns.
Company Negative News
- Quarterly PAT turned negative (-67.9 Cr. vs 20.9 Cr.), showing earnings pressure.
- Quarterly profit variation -949%, reflecting severe decline.
Company Positive News
- Stable institutional holding (no major changes in FII/DII positions).
- Large-scale operations provide potential for turnaround if fundamentals improve.
Industry
- Industry PE at 18.6, far below company’s valuation, highlighting overvaluation.
- Chemical and fertilizer sector benefits from government support and cyclical demand, but profitability remains critical.
Conclusion
⚠️ FACT is not a strong candidate for long-term investment due to poor ROE, ROCE, high debt, and unsustainable valuation. Entry only makes sense near deep value zones (560–620 ₹) for short-term recovery trades. Long-term investors should avoid or exit on rallies unless fundamentals improve significantly.
Selva, would you like me to extend this into a peer benchmarking overlay with fertilizer and chemical sector peers (like Chambal Fertilizers, GNFC, Deepak Fertilizers) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?