GLAXO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | GLAXO | Market Cap | 40,764 Cr. | Current Price | 2,406 ₹ | High / Low | 3,516 ₹ |
| Stock P/E | 43.1 | Book Value | 101 ₹ | Dividend Yield | 1.74 % | ROCE | 62.6 % |
| ROE | 46.4 % | Face Value | 10.0 ₹ | DMA 50 | 2,457 ₹ | DMA 200 | 2,631 ₹ |
| Chg in FII Hold | -0.16 % | Chg in DII Hold | -0.05 % | PAT Qtr | 253 Cr. | PAT Prev Qtr | 205 Cr. |
| RSI | 49.7 | MACD | -14.8 | Volume | 38,120 | Avg Vol 1Wk | 69,846 |
| Low price | 1,960 ₹ | High price | 3,516 ₹ | PEG Ratio | -2.17 | Debt to equity | 0.02 |
| 52w Index | 28.7 % | Qtr Profit Var | 3.15 % | EPS | 56.0 ₹ | Industry PE | 29.1 |
📊 Analysis: Glaxo shows exceptional efficiency with ROCE at 62.6% and ROE at 46.4%, reflecting strong capital utilization. The company has a low debt-to-equity ratio (0.02), ensuring financial stability. EPS of 56 ₹ supports earnings strength, and quarterly PAT growth (3.15%) indicates steady performance. However, the PEG ratio (-2.17) signals weak growth relative to valuation, and the P/E of 43.1 is significantly higher than the industry PE of 29.1, suggesting premium valuation. Current price (2,406 ₹) is below DMA 200 (2,631 ₹), showing consolidation.
💰 Entry Price Zone: Ideal accumulation range is 2,250 ₹ – 2,350 ₹, close to support levels and below DMA 50 (2,457 ₹). Current price is near this zone, making staggered buying suitable for long-term investors.
📈 Exit / Holding Strategy: For existing holders, maintain positions for 3–5 years given strong efficiency ratios and dividend yield (1.74%). Partial profit booking can be considered near 3,400 ₹ – 3,500 ₹ (recent highs). Long-term holding is justified by strong ROE/ROCE, but valuation premium requires cautious accumulation.
✅ Positive
- High ROCE (62.6%) and ROE (46.4%) showing superior efficiency
- Low debt-to-equity ratio (0.02)
- Consistent PAT growth (253 Cr. vs 205 Cr.)
- Dividend yield of 1.74% provides steady income
⚠️ Limitation
- Premium valuation with P/E at 43.1 vs industry PE of 29.1
- PEG ratio (-2.17) indicates weak growth prospects
- Institutional holdings reduced (FII -0.16%, DII -0.05%)
- Trading volume below weekly average, showing reduced momentum
📉 Company Negative News
- Decline in institutional investor confidence (FII/DII reduction)
- Stock consolidating below 52-week high (3,516 ₹)
📈 Company Positive News
- Quarterly profit growth of 3.15% YoY
- Strong efficiency ratios (ROCE/ROE)
- Stable dividend yield supporting investor confidence
🏭 Industry
- Pharmaceutical sector enjoys long-term demand stability
- Industry PE at 29.1 highlights moderate valuation levels
- Sector rotation favors healthcare and pharma in defensive cycles
🔎 Conclusion
Glaxo is a fundamentally strong pharma stock with superior efficiency ratios and stable dividend yield. While valuations are premium and growth visibility is modest, the company remains a good candidate for long-term holding. Ideal strategy: accumulate near 2,250–2,350 ₹, hold for 3–5 years, and book partial profits near highs (3,400–3,500 ₹). Best suited for investors seeking stability and efficiency-driven compounding in the healthcare sector.