NATIONALUM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | NATIONALUM | Market Cap | 68,084 Cr. | Current Price | 371 ₹ | High / Low | 432 ₹ |
| Stock P/E | 11.0 | Book Value | 109 ₹ | Dividend Yield | 2.83 % | ROCE | 43.7 % |
| ROE | 32.6 % | Face Value | 5.00 ₹ | DMA 50 | 326 ₹ | DMA 200 | 251 ₹ |
| Chg in FII Hold | 3.45 % | Chg in DII Hold | -3.10 % | PAT Qtr | 1,601 Cr. | PAT Prev Qtr | 1,433 Cr. |
| RSI | 55.3 | MACD | 18.4 | Volume | 2,89,40,296 | Avg Vol 1Wk | 3,58,02,258 |
| Low price | 138 ₹ | High price | 432 ₹ | PEG Ratio | 0.51 | Debt to equity | 0.00 |
| 52w Index | 79.4 % | Qtr Profit Var | 1.14 % | EPS | 33.6 ₹ | Industry PE | 27.4 |
📊 Analysis: NATIONALUM demonstrates strong fundamentals with ROCE at 43.7% and ROE at 32.6%, supported by a debt-free balance sheet. The stock trades at an attractive valuation with a P/E of 11.0 compared to the industry average of 27.4, making it undervalued. Dividend yield at 2.83% provides solid income support. Technical indicators (RSI ~55.3, MACD positive) suggest bullish momentum, with price above both 50 DMA (326 ₹) and 200 DMA (251 ₹). PEG ratio of 0.51 indicates attractive valuation relative to growth. Quarterly PAT growth is modest (+1.14%), but overall profitability remains strong. This makes NATIONALUM a good candidate for long-term investment.
💰 Ideal Entry Zone: A favorable entry would be in the range of 340 ₹ – 360 ₹, closer to the 50 DMA and below current price, offering better margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain a long-term horizon (3–5 years) given strong ROE/ROCE, debt-free status, and attractive dividend yield. Consider partial profit booking near 420–430 ₹ if valuations expand or momentum peaks. Exit strategy should be considered if earnings growth slows significantly or if institutional selling persists. Long-term investors may continue holding for compounding returns and steady dividend income.
✅ Positive
- Strong ROCE (43.7%) and ROE (32.6%) indicate excellent efficiency.
- Debt-free balance sheet ensures financial stability.
- Attractive valuation with P/E (11.0) well below industry average (27.4).
- Dividend yield (2.83%) provides strong income support.
- FII holding increased (+3.45%), showing foreign investor confidence.
⚠️ Limitation
- Quarterly PAT growth modest (+1.14%), indicating limited short-term momentum.
- DII holding decreased (-3.10%), showing reduced domestic institutional support.
- Book value (109 ₹) is significantly lower than current price, showing stretched valuations.
📉 Company Negative News
- DII holding decreased, reflecting weaker domestic support.
- Quarterly profit growth remains modest despite strong fundamentals.
📈 Company Positive News
- Quarterly PAT improved to 1,601 Cr. from 1,433 Cr.
- EPS at 33.6 ₹ indicates strong earnings power.
- FII inflows reflect confidence in long-term prospects.
🏭 Industry
- Industry P/E at 27.4 indicates sector is moderately valued compared to NATIONALUM’s discount.
- Metals and mining sector expected to benefit from infrastructure growth and global demand recovery.
🔎 Conclusion
NATIONALUM is a fundamentally strong company with excellent efficiency metrics, debt-free status, and attractive dividend yield. Despite modest quarterly growth, its undervaluation and strong fundamentals make it suitable for long-term investors. Ideal entry is below current price (~340–360 ₹). Existing holders should maintain positions with a 3–5 year horizon, booking profits near highs if valuations remain excessive.