NH - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.6
| Stock Code | NH | Market Cap | 35,934 Cr. | Current Price | 1,758 ₹ | High / Low | 2,372 ₹ |
| Stock P/E | 77.4 | Book Value | 114 ₹ | Dividend Yield | 0.26 % | ROCE | 19.4 % |
| ROE | 21.0 % | Face Value | 10.0 ₹ | DMA 50 | 1,843 ₹ | DMA 200 | 1,782 ₹ |
| Chg in FII Hold | 0.61 % | Chg in DII Hold | 0.15 % | PAT Qtr | 138 Cr. | PAT Prev Qtr | 87.4 Cr. |
| RSI | 40.1 | MACD | -35.4 | Volume | 4,16,741 | Avg Vol 1Wk | 3,29,443 |
| Low price | 1,296 ₹ | High price | 2,372 ₹ | PEG Ratio | 1.67 | Debt to equity | 0.69 |
| 52w Index | 42.9 % | Qtr Profit Var | 30.6 % | EPS | 22.7 ₹ | Industry PE | 44.0 |
📊 Analysis: NH shows strong profitability with ROE at 21.0% and ROCE at 19.4%, supported by solid quarterly profit growth (PAT 138 Cr. vs 87.4 Cr., +30.6%). However, the stock trades at a steep premium with a P/E of 77.4 compared to the industry average of 44.0, making it significantly overvalued. Dividend yield at 0.26% is very low, offering limited income support. Debt-to-equity at 0.69 indicates moderate leverage. Technical indicators (RSI ~40.1, MACD negative) suggest weak momentum, with price below both 50 DMA (1,843 ₹) and 200 DMA (1,782 ₹). PEG ratio of 1.67 indicates valuations are moderately expensive relative to growth. Overall, NH is a growth-oriented but richly valued stock, suitable only for long-term investors willing to hold through volatility.
💰 Ideal Entry Zone: A favorable entry would be in the range of 1,600 ₹ – 1,700 ₹, closer to the 200 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 and earnings growth. Consider partial profit booking near 2,300–2,350 ₹ if valuations remain overheated. Exit strategy should be considered if debt levels rise further or if earnings growth slows. Long-term investors may continue holding for compounding returns, but should be cautious of valuation risks.
✅ Positive
- Strong ROE (21.0%) and ROCE (19.4%) indicate efficient capital use.
- Quarterly PAT growth (+30.6%) reflects operational strength.
- EPS at 22.7 ₹ provides earnings visibility.
- FII holding increased (+0.61%), showing foreign investor confidence.
- DII holding increased (+0.15%), reflecting domestic support.
⚠️ Limitation
- High P/E (77.4) compared to industry average (44.0) suggests overvaluation.
- Dividend yield (0.26%) is very low, offering limited income support.
- Debt-to-equity ratio (0.69) indicates moderate leverage risk.
- Weak technical momentum (RSI low, MACD negative).
📉 Company Negative News
- Stock trading below DMA levels indicates near-term weakness.
- High valuations may limit upside potential in the short term.
📈 Company Positive News
- Quarterly PAT surged to 138 Cr. from 87.4 Cr.
- Institutional support with both FII and DII holdings increasing.
- Strong earnings growth supports long-term potential.
🏭 Industry
- Industry P/E at 44.0 indicates sector is moderately valued compared to NH’s premium.
- Healthcare sector expected to benefit from rising demand and structural growth opportunities.
🔎 Conclusion
NH is a fundamentally strong company with solid efficiency metrics and earnings growth, but valuations are stretched and dividend yield is minimal. Ideal entry is below current price (~1,600–1,700 ₹). Existing holders should maintain positions with a 3–5 year horizon, booking profits near highs if valuations remain excessive. Long-term investors may hold for growth, but should be cautious of valuation risks and moderate leverage.