MAHABANK - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | MAHABANK | Market Cap | 50,351 Cr. | Current Price | 65.4 ₹ | High / Low | 67.8 ₹ |
| Stock P/E | 7.74 | Book Value | 43.3 ₹ | Dividend Yield | 2.30 % | ROCE | 5.78 % |
| ROE | 22.9 % | Face Value | 10.0 ₹ | DMA 50 | 61.8 ₹ | DMA 200 | 57.6 ₹ |
| Chg in FII Hold | 2.57 % | Chg in DII Hold | 3.44 % | PAT Qtr | 1,779 Cr. | PAT Prev Qtr | 1,633 Cr. |
| RSI | 56.9 | MACD | 0.72 | Volume | 1,49,74,263 | Avg Vol 1Wk | 1,99,63,826 |
| Low price | 38.1 ₹ | High price | 67.8 ₹ | PEG Ratio | 0.11 | Debt to equity | 10.6 |
| 52w Index | 91.9 % | Qtr Profit Var | 26.5 % | EPS | 8.45 ₹ | Industry PE | 7.88 |
📊 Analysis: MAHABANK shows strong fundamentals relative to its valuation. ROE at 22.9% reflects excellent profitability, though ROCE at 5.78% is modest due to high leverage (debt-to-equity 10.6, typical for banks). The stock trades at a P/E of 7.74, in line with the industry average of 7.88, suggesting fair valuation. The PEG ratio of 0.11 indicates growth is attractively priced. Dividend yield of 2.30% adds income appeal. EPS of ₹8.45 and PAT growth (₹1,779 Cr. vs ₹1,633 Cr.) highlight earnings strength. Technical indicators (RSI 56.9, MACD positive) suggest neutral to mildly bullish momentum.
💰 Entry Price Zone: Ideal entry would be in the ₹58 – ₹62 range, closer to DMA 200 (₹57.6), offering better risk-reward alignment.
⏳ Exit Strategy / Holding Period: For existing holders, a long-term horizon (3–5 years) is advisable given strong ROE and dividend yield. Consider partial profit booking near ₹65–₹68 (52-week high zone) unless earnings growth accelerates further.
✅ Positive
- ROE of 22.9% indicates strong profitability.
- PEG ratio of 0.11 highlights attractively priced growth.
- Dividend yield of 2.30% adds shareholder value.
- Quarterly PAT growth (+26.5%) shows strong performance.
- FII holdings increased (+2.57%) and DII holdings increased (+3.44%), reflecting strong institutional confidence.
⚠️ Limitation
- ROCE at 5.78% is modest compared to non-financial sectors.
- High leverage (debt-to-equity 10.6) is typical for banks but adds risk.
- Stock trading close to 52-week high may limit immediate upside.
📉 Company Negative News
- No major negative news reported, but high leverage remains a structural risk.
- Short-term momentum indicators suggest limited upside potential.
📈 Company Positive News
- Quarterly PAT growth from ₹1,633 Cr. to ₹1,779 Cr. highlights earnings strength.
- Strong dividend payout supports investor confidence.
- Institutional investors (FII & DII) increased holdings significantly.
🏭 Industry
- Banking sector trades at an average P/E of 7.88, in line with MAHABANK’s valuation.
- Industry outlook remains positive with credit growth and digital banking expansion.
🔎 Conclusion
MAHABANK is a fundamentally strong bank with fair valuations, high ROE, and consistent earnings growth. Long-term investors may hold with a 3–5 year horizon, while new investors should accumulate in the ₹58–₹62 range. Profit booking near highs is advisable unless earnings growth accelerates significantly.