RCF - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.0
| Stock Code | RCF | Market Cap | 7,464 Cr. | Current Price | 135 ₹ | High / Low | 167 ₹ |
| Stock P/E | 24.1 | Book Value | 89.3 ₹ | Dividend Yield | 0.98 % | ROCE | 7.47 % |
| ROE | 5.00 % | Face Value | 10.0 ₹ | DMA 50 | 139 ₹ | DMA 200 | 147 ₹ |
| Chg in FII Hold | 0.19 % | Chg in DII Hold | 0.08 % | PAT Qtr | 106 Cr. | PAT Prev Qtr | 54.1 Cr. |
| RSI | 47.1 | MACD | -1.73 | Volume | 11,58,740 | Avg Vol 1Wk | 22,25,471 |
| Low price | 108 ₹ | High price | 167 ₹ | PEG Ratio | -0.89 | Debt to equity | 0.56 |
| 52w Index | 46.6 % | Qtr Profit Var | 34.5 % | EPS | 5.66 ₹ | Industry PE | 18.7 |
📊 Analysis: Rashtriya Chemicals & Fertilizers (RCF) trades at a P/E of 24.1, which is higher than the industry average of 18.7, suggesting moderate overvaluation. ROE (5.0%) and ROCE (7.47%) are weak, reflecting poor capital efficiency. The PEG ratio of -0.89 highlights negative growth prospects relative to valuation. Dividend yield of 0.98% provides limited income support. On the positive side, quarterly PAT improved significantly from ₹54.1 Cr. to ₹106 Cr. (+34.5%), showing earnings recovery. EPS stands at ₹5.66, supported by profitability. Technical indicators (RSI 47.1, MACD negative) suggest consolidation. Ideal entry zone lies between ₹120–₹125, closer to support levels and below DMA averages.
📈 Exit Strategy: If already holding, investors should consider a medium-term horizon of 1–2 years, focusing on earnings consistency. Partial profit booking can be considered near ₹155–₹160 if momentum builds. Long-term holding is risky unless ROE/ROCE improve significantly and valuations normalize.
✅ Positive
- Quarterly PAT growth from ₹54.1 Cr. to ₹106 Cr. (+34.5%).
- EPS of ₹5.66 reflects profitability base.
- Dividend yield of 0.98% provides some income support.
- Institutional buying (FII +0.19%, DII +0.08%) supports confidence.
⚠️ Limitation
- P/E of 24.1 is higher than industry average (18.7).
- Weak ROE (5.0%) and ROCE (7.47%).
- PEG ratio of -0.89 suggests poor valuation-to-growth balance.
- Stock trading below DMA 200 (₹147) indicates weak long-term trend.
📉 Company Negative News
- Weak return ratios despite profitability.
- MACD negative indicates weak short-term momentum.
📈 Company Positive News
- Quarterly PAT doubled compared to previous quarter.
- EPS growth supports profitability outlook.
- Institutional inflows show investor confidence.
🏭 Industry
- Industry PE at 18.7 suggests sector is moderately valued.
- Fertilizer sector benefits from government subsidies and agricultural demand.
- Seasonal demand cycles influence profitability.
🔎 Conclusion
RCF is a moderately attractive investment with improving earnings but weak return ratios and stretched valuations. Ideal entry is around ₹120–₹125 for better valuation comfort. Existing investors should hold for 1–2 years, with partial profit booking near ₹155–₹160. While government support for fertilizers provides stability, low ROE/ROCE and poor PEG ratio require cautious monitoring.