PEL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.8
| Stock Code | PEL | Market Cap | 25,483 Cr. | Current Price | 1,124 ₹ | High / Low | 1,356 ₹ |
| Stock P/E | 61.4 | Book Value | 974 ₹ | Dividend Yield | 0.98 % | ROCE | 4.90 % |
| ROE | 2.31 % | Face Value | 2.00 ₹ | DMA 50 | 1,144 ₹ | DMA 200 | 1,096 ₹ |
| Chg in FII Hold | -0.89 % | Chg in DII Hold | 0.86 % | PAT Qtr | 162 Cr. | PAT Prev Qtr | -23.3 Cr. |
| RSI | 48.4 | MACD | -6.85 | Volume | 0 | Avg Vol 1Wk | 0 |
| Low price | 848 ₹ | High price | 1,356 ₹ | PEG Ratio | -3.22 | Debt to equity | 0.38 |
| 52w Index | 54.4 % | Qtr Profit Var | -28.8 % | EPS | 19.4 ₹ | Industry PE | 21.9 |
📊 PEL shows weak efficiency metrics with ROCE (4.90%) and ROE (2.31%), while trading at a high P/E (61.4 vs. industry 21.9). The negative PEG ratio (-3.22) highlights poor valuation relative to growth. Dividend yield is modest at 0.98%, offering limited compounding. Current price (₹1,124) is near both 50 DMA (₹1,144) and 200 DMA (₹1,096), suggesting consolidation. Long-term investors should be cautious; ideal entry zone is ₹950–₹1,050 for margin of safety. If already holding, exit strategy should target rallies near ₹1,300–₹1,350, with a short-to-medium horizon of 1–2 years unless profitability improves significantly.
Positive
- ✅ Debt-to-equity ratio (0.38) indicates moderate leverage
- ✅ DII holding increased (+0.86%) shows domestic institutional support
- ✅ PAT turnaround from loss (-₹23.3 Cr.) to profit (₹162 Cr.) sequentially
- ✅ Strong 52-week performance (+54.4%) reflects investor optimism
Limitation
- ⚠️ High P/E (61.4) compared to industry average (21.9) suggests overvaluation
- ⚠️ Weak ROE (2.31%) and ROCE (4.90%) highlight poor capital efficiency
- ⚠️ Negative PEG ratio (-3.22) indicates unsustainable valuation vs. growth
- ⚠️ Quarterly profit variation (-28.8%) shows earnings pressure
Company Negative News
- 📉 FII holding reduced (-0.89%) reflects declining foreign investor confidence
- 📉 Quarterly profit decline (-28.8%) despite sequential PAT recovery
Company Positive News
- 📈 DII accumulation (+0.86%) indicates domestic confidence
- 📈 PAT recovery from loss to profit highlights operational improvement
Industry
- 🌐 Diversified financial and healthcare exposure provides long-term potential
- 🌐 Industry PE (21.9) vs. PEL’s PE (61.4) highlights valuation premium
Conclusion
💡 PEL is not a strong candidate for long-term investment due to weak efficiency metrics and high valuations. Entry is advisable only near ₹950–₹1,050 for speculative positions. Existing holders should exit on rallies near ₹1,300–₹1,350 unless ROE/ROCE improve and earnings growth sustains. Long-term compounding potential is limited until profitability strengthens and valuations normalize.
Would you like me to also prepare a peer benchmarking overlay comparing PEL against other diversified financial and healthcare companies, or a basket scan to identify stronger long-term compounding opportunities in the sector?