GLENMARK - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.5
| Stock Code | GLENMARK | Market Cap | 55,087 Cr. | Current Price | 1,954 ₹ | High / Low | 2,286 ₹ |
| Stock P/E | 37.1 | Book Value | 848 ₹ | Dividend Yield | 0.13 % | ROCE | 9.72 % |
| ROE | 7.35 % | Face Value | 1.00 ₹ | DMA 50 | 1,977 ₹ | DMA 200 | 1,859 ₹ |
| Chg in FII Hold | -1.53 % | Chg in DII Hold | 1.48 % | PAT Qtr | 426 Cr. | PAT Prev Qtr | 193 Cr. |
| RSI | 46.4 | MACD | -11.4 | Volume | 4,04,304 | Avg Vol 1Wk | 6,47,757 |
| Low price | 1,275 ₹ | High price | 2,286 ₹ | PEG Ratio | 18.6 | Debt to equity | 0.02 |
| 52w Index | 67.1 % | Qtr Profit Var | 3.00 % | EPS | 0.74 ₹ | Industry PE | 29.1 |
📊 Analysis: Glenmark shows moderate fundamentals with ROCE at 9.72% and ROE at 7.35%, which are below ideal levels for long-term compounding. The company is nearly debt-free (0.02 debt-to-equity), ensuring financial stability. EPS of 0.74 ₹ is weak relative to its P/E of 37.1, indicating stretched valuations compared to the industry PE of 29.1. The PEG ratio of 18.6 highlights poor valuation relative to growth. Quarterly PAT growth (426 Cr. vs 193 Cr.) is strong, but overall profit variation is modest at 3%. Current price (1,954 ₹) is near DMA 50 (1,977 ₹) and above DMA 200 (1,859 ₹), showing consolidation.
💰 Entry Price Zone: Ideal accumulation range is 1,800 ₹ – 1,850 ₹, close to DMA 200 (1,859 ₹) for margin of safety. Current price is slightly above this zone, so waiting for dips is advisable.
📈 Exit / Holding Strategy: For existing holders, maintain positions with a medium-term horizon (2–3 years). Partial profit booking can be considered near 2,250 ₹ – 2,280 ₹ (recent highs). Long-term holding beyond 3 years requires improvement in ROE/ROCE and earnings growth. Dividend yield (0.13%) is negligible, so focus remains on capital appreciation.
✅ Positive
- Debt-free balance sheet (0.02 debt-to-equity)
- Strong quarterly PAT growth (426 Cr. vs 193 Cr.)
- DII holdings increased (+1.48%)
- Stock trading above DMA 200, showing technical support
⚠️ Limitation
- Low ROE (7.35%) and ROCE (9.72%)
- High PEG ratio (18.6) indicates poor valuation relative to growth
- P/E of 37.1 is premium compared to industry PE (29.1)
- Dividend yield of 0.13% offers negligible income
📉 Company Negative News
- Decline in FII holdings (-1.53%)
- Weak EPS (0.74 ₹) relative to valuation
- Trading volume below weekly average, showing reduced momentum
📈 Company Positive News
- Quarterly profit growth of 3% YoY
- DII confidence increased (+1.48%)
- Stock supported by DMA 200 zone
🏭 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
Glenmark is a moderately valued pharma stock with debt-free status and recent profit growth. However, efficiency ratios (ROE/ROCE) are weak, and valuations are stretched relative to earnings. Ideal strategy: accumulate near 1,800–1,850 ₹, hold for 2–3 years, and book partial profits near highs (2,250–2,280 ₹). Long-term compounding potential depends on improvement in profitability and earnings growth.