MEDANTA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | MEDANTA | Market Cap | 30,271 Cr. | Current Price | 1,127 ₹ | High / Low | 1,456 ₹ |
| Stock P/E | 57.6 | Book Value | 141 ₹ | Dividend Yield | 0.04 % | ROCE | 19.6 % |
| ROE | 15.2 % | Face Value | 2.00 ₹ | DMA 50 | 1,156 ₹ | DMA 200 | 1,218 ₹ |
| Chg in FII Hold | -0.87 % | Chg in DII Hold | 1.02 % | PAT Qtr | 128 Cr. | PAT Prev Qtr | 137 Cr. |
| RSI | 50.0 | MACD | -20.3 | Volume | 1,88,283 | Avg Vol 1Wk | 3,25,271 |
| Low price | 1,010 ₹ | High price | 1,456 ₹ | PEG Ratio | 1.82 | Debt to equity | 0.07 |
| 52w Index | 26.2 % | Qtr Profit Var | 22.6 % | EPS | 19.2 ₹ | Industry PE | 43.3 |
📊 Analysis: Medanta trades at a premium valuation with a P/E of 57.6 compared to the industry PE of 43.3. ROCE (19.6%) and ROE (15.2%) are moderate, showing decent efficiency but not exceptional. The PEG ratio of 1.82 suggests the stock is overvalued relative to its growth. EPS of 19.2 ₹ is modest, and dividend yield (0.04%) is negligible, making it more of a growth play than an income stock. Debt-to-equity is low (0.07), ensuring financial stability. Quarterly PAT has declined slightly (128 Cr. vs 137 Cr.), though YoY profit variation remains positive at 22.6%. Technicals show consolidation near DMA 50 (1,156 ₹) and DMA 200 (1,218 ₹).
💰 Entry Price Zone: Ideal accumulation range is 1,050 ₹ – 1,100 ₹, close to support levels and below DMA averages for margin of safety. Current price (1,127 ₹) is slightly above this zone, so staggered buying 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 1,400 ₹ – 1,450 ₹ (recent highs). Long-term holding beyond 3 years requires improvement in ROE/ROCE and earnings growth. Dividend yield is negligible, so focus remains on capital appreciation.
✅ Positive
- Low debt-to-equity ratio (0.07), ensuring financial stability
- Moderate ROCE (19.6%) and ROE (15.2%)
- Quarterly profit variation positive at 22.6% YoY
- DII holdings increased (+1.02%)
⚠️ Limitation
- High P/E of 57.6 vs industry PE of 43.3
- PEG ratio of 1.82 indicates overvaluation
- Dividend yield of 0.04% offers negligible income
- EPS of 19.2 ₹ is modest relative to valuation
📉 Company Negative News
- Decline in FII holdings (-0.87%)
- Quarterly PAT declined (128 Cr. vs 137 Cr.)
- MACD negative (-20.3), showing weak momentum
📈 Company Positive News
- DII confidence increased (+1.02%)
- YoY profit growth of 22.6%
- Stock supported by DMA 200 zone (1,218 ₹)
🏭 Industry
- Healthcare sector enjoys long-term demand stability
- Industry PE at 43.3 highlights investor optimism
- Sector rotation favors healthcare in defensive cycles
🔎 Conclusion
Medanta is a moderately efficient healthcare stock with stable fundamentals and low debt. However, valuations are premium, and dividend yield is negligible. Ideal strategy: accumulate near 1,050–1,100 ₹, hold for 2–3 years, and book partial profits near highs (1,400–1,450 ₹). Long-term compounding potential depends on improvement in profitability and earnings growth.