RCF - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 2.6

📊 Fundamental & Valuation Analysis

RCF (Rashtriya Chemicals and Fertilizers Ltd) presents a mixed bag for long-term investors

🔍 Key Metrics

Metric Value Interpretation

Market Cap ₹8,410 Cr Mid-cap PSU

Current Price ₹152 Near 200 DMA

Book Value ₹86 P/B ~1.77 (Fair)

Stock P/E 35.1 Overvalued vs Industry PE (26.1)

PEG Ratio -1.33 Negative growth outlook

ROE 5.12% Weak return on equity

ROCE 7.50% Below industry average

Dividend Yield 0.81% Low income generation

Debt-to-Equity 0.58 Moderate leverage

EPS ₹4.39 Low earnings base

PAT Qtr YoY -17.1% Declining profitability

📉 Technical & Trend Analysis

RSI (45.9): Neutral zone, no strong momentum

MACD (-0.57): Bearish crossover

Volume: Slightly below weekly average, indicating waning interest

DMA 50 & 200: Both at ₹153, suggesting sideways movement

Price Trend: Down ~27% YoY, underperforming broader indices

✅ Long-Term Investment Outlook

RCF is a government-backed fertilizer company with strategic importance, but its financial efficiency and growth metrics are weak. The high P/E and negative PEG ratio suggest overvaluation without growth support. ROE and ROCE are below ideal thresholds for long-term compounding.

🚫 Not a strong candidate for long-term investment unless

Government policy shifts favor fertilizer subsidies

Capacity expansion or margin improvement is visible

ROE/ROCE improve above 12–15%

🎯 Ideal Entry Price Zone

Based on valuation and technical support levels

Buy Zone: ₹130–₹140

Near historical support and below book value

Offers margin of safety for long-term accumulation

🧭 Exit Strategy (If You Already Hold)

If you're holding RCF

Short-Term Traders: Consider exiting near ₹165–₹170 resistance zone

Long-Term Investors

Hold only if you expect policy tailwinds or strategic expansion

Reassess if ROE/ROCE remain below 10% over next 2–3 quarters

Exit if price breaks below ₹130 with volume confirmation

⏳ Suggested Holding Period

Max 6–12 months unless fundamentals improve

Monitor quarterly earnings, government fertilizer policy, and input cost trends

Would you like a comparison with peers like Coromandel or Chambal Fertilizers to see better alternatives?

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