LUPIN - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | LUPIN | Market Cap | 99,983 Cr. | Current Price | 2,187 ₹ | High / Low | 2,249 ₹ |
| Stock P/E | 18.7 | Book Value | 596 ₹ | Dividend Yield | 0.55 % | ROCE | 21.9 % |
| ROE | 17.8 % | Face Value | 2.00 ₹ | DMA 50 | 2,115 ₹ | DMA 200 | 2,033 ₹ |
| Chg in FII Hold | 1.00 % | Chg in DII Hold | -0.98 % | PAT Qtr | 869 Cr. | PAT Prev Qtr | 2,128 Cr. |
| RSI | 58.9 | MACD | 8.85 | Volume | 13,28,675 | Avg Vol 1Wk | 8,98,035 |
| Low price | 1,774 ₹ | High price | 2,249 ₹ | PEG Ratio | 0.11 | Debt to equity | 0.04 |
| 52w Index | 86.9 % | Qtr Profit Var | 7.55 % | EPS | 126 ₹ | Industry PE | 29.2 |
📊 Analysis: Lupin trades at ₹2,187 with a P/E of 18.7, which is attractive compared to the industry average of 29.2, suggesting undervaluation. ROE (17.8%) and ROCE (21.9%) are strong, reflecting efficient capital utilization. Dividend yield at 0.55% provides modest income support. The PEG ratio (0.11) highlights excellent growth potential relative to valuation. Technical indicators (RSI 58.9, MACD 8.85) show neutral-to-bullish momentum. PAT has declined sequentially (2,128 Cr. → 869 Cr.), but overall profitability remains solid. Debt-to-equity at 0.04 indicates a virtually debt-free balance sheet, adding financial stability.
💡 Entry Price Zone: Ideal entry would be between ₹2,050–₹2,100, closer to DMA 200 (₹2,033), offering better valuation comfort and risk-reward balance.
📈 Exit / Holding Strategy: If already holding, Lupin is a strong candidate for long-term investment (5+ years) given its robust fundamentals and growth potential. Exit strategy should be considered only if price sustains below ₹1,950 or if profitability metrics weaken significantly. Otherwise, continue holding for compounding returns and dividend income.
✅ Positive
- Strong ROE (17.8%) and ROCE (21.9%).
- Low P/E (18.7) vs industry average (29.2), indicating undervaluation.
- PEG ratio (0.11) highlights excellent growth potential.
- Debt-to-equity ratio at 0.04, virtually debt-free.
- EPS at ₹126, reflecting strong earnings power.
⚠️ Limitation
- Sequential decline in PAT (2,128 Cr. → 869 Cr.).
- Dividend yield at 0.55%, modest for income investors.
- DII holdings reduced (-0.98%), showing weaker domestic institutional confidence.
📉 Company Negative News
- Sequential drop in quarterly profits.
- Domestic institutional investors trimmed positions.
📈 Company Positive News
- FII holdings increased (+1.00%), showing strong foreign investor confidence.
- Stock trading near 52-week high (₹2,249), reflecting resilience.
🏭 Industry
- Pharma sector has long-term growth potential driven by global healthcare demand.
- Industry P/E at 29.2 highlights Lupin is trading at a discount compared to peers.
🔎 Conclusion
Lupin is fundamentally strong with high ROE, ROCE, and undervaluation relative to industry peers. It is a good candidate for long-term investment. Best strategy: accumulate between ₹2,050–₹2,100 and hold for 5+ years to benefit from compounding and dividend income. Existing holders should continue holding unless profitability weakens significantly.