GRASIM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.7
| Stock Code | GRASIM | Market Cap | 1,93,122 Cr. | Current Price | 2,838 ₹ | High / Low | 2,979 ₹ |
| Stock P/E | 562 | Book Value | 808 ₹ | Dividend Yield | 0.35 % | ROCE | 1.52 % |
| ROE | 0.35 % | Face Value | 2.00 ₹ | DMA 50 | 2,799 ₹ | DMA 200 | 2,748 ₹ |
| Chg in FII Hold | 0.12 % | Chg in DII Hold | -0.28 % | PAT Qtr | 805 Cr. | PAT Prev Qtr | -118 Cr. |
| RSI | 55.4 | MACD | 1.72 | Volume | 5,72,641 | Avg Vol 1Wk | 7,97,676 |
| Low price | 2,301 ₹ | High price | 2,979 ₹ | PEG Ratio | -9.31 | Debt to equity | 0.24 |
| 52w Index | 79.2 % | Qtr Profit Var | 6.31 % | EPS | 3.29 ₹ | Industry PE | 30.8 |
📊 Analysis: Grasim Industries currently trades at an extremely high P/E of 562 compared to the industry PE of 30.8, making it significantly overvalued. ROCE (1.52%) and ROE (0.35%) are very weak, reflecting poor capital efficiency. EPS of 3.29 ₹ is low relative to valuation, and the PEG ratio (-9.31) highlights negative growth visibility. Dividend yield of 0.35% offers negligible income. Debt-to-equity at 0.24 is manageable, showing moderate leverage. Quarterly PAT recovery (805 Cr. vs -118 Cr.) is positive, but overall profit variation remains modest at 6.31%. Technicals show support near DMA 200 (2,748 ₹) and consolidation around DMA 50 (2,799 ₹), with RSI at 55.4 indicating neutral momentum.
💰 Entry Price Zone: Ideal accumulation range is 2,500 ₹ – 2,650 ₹, closer to DMA 200 (2,748 ₹) for margin of safety. Current price (2,838 ₹) is above this zone, so fresh entry should be cautious and only on dips.
📈 Exit / Holding Strategy: For existing holders, consider reducing exposure given weak fundamentals and extreme valuation. Partial profit booking can be considered near 2,950 ₹ – 2,980 ₹ (recent highs). Long-term holding beyond 2–3 years is risky unless ROE/ROCE improve significantly and earnings growth stabilizes. Focus should remain on capital preservation rather than compounding.
✅ Positive
- Quarterly PAT recovery (805 Cr. vs -118 Cr.)
- Debt-to-equity ratio of 0.24, showing manageable leverage
- FII holdings increased (+0.12%)
- Strong 52-week performance (79.2% index)
⚠️ Limitation
- Extremely high P/E (562) vs industry PE (30.8)
- Weak ROE (0.35%) and ROCE (1.52%)
- PEG ratio (-9.31) indicates poor growth visibility
- Dividend yield of 0.35% offers negligible income
📉 Company Negative News
- Decline in DII holdings (-0.28%)
- Quarterly profit variation modest at 6.31%
- Low EPS (3.29 ₹) relative to valuation
📈 Company Positive News
- Turnaround from loss to profit in latest quarter
- FII confidence increased (+0.12%)
- Stock supported by DMA 200 zone
🏭 Industry
- Diversified conglomerate sector with cyclical exposure
- Industry PE at 30.8 highlights moderate valuation levels
- Sector rotation favors companies with strong balance sheets
🔎 Conclusion
Grasim Industries is a high-risk investment with weak efficiency ratios, extreme valuations, and limited growth visibility. While recent profit recovery is positive, long-term prospects remain uncertain. Ideal strategy: accumulate cautiously near 2,500–2,650 ₹ only if risk appetite is high, otherwise avoid fresh entry. Existing holders should consider partial exit near highs (2,950–2,980 ₹) and reassess based on profitability improvements and stronger ROE/ROCE metrics.