RRKABEL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.9
| Stock Code | RRKABEL | Market Cap | 16,066 Cr. | Current Price | 1,424 ₹ | High / Low | 1,563 ₹ |
| Stock P/E | 34.7 | Book Value | 206 ₹ | Dividend Yield | 0.42 % | ROCE | 19.7 % |
| ROE | 15.2 % | Face Value | 5.00 ₹ | DMA 50 | 1,414 ₹ | DMA 200 | 1,353 ₹ |
| Chg in FII Hold | 0.22 % | Chg in DII Hold | 0.07 % | PAT Qtr | 130 Cr. | PAT Prev Qtr | 116 Cr. |
| RSI | 51.1 | MACD | -23.6 | Volume | 3,39,321 | Avg Vol 1Wk | 2,55,994 |
| Low price | 750 ₹ | High price | 1,563 ₹ | PEG Ratio | 2.56 | Debt to equity | 0.17 |
| 52w Index | 82.9 % | Qtr Profit Var | 91.1 % | EPS | 39.7 ₹ | Industry PE | 18.2 |
📊 Analysis: RR Kabel demonstrates strong fundamentals with ROCE at 19.7% and ROE at 15.2%, reflecting efficient capital utilization. The debt-to-equity ratio of 0.17 is low, ensuring financial stability. EPS of ₹39.7 and quarterly PAT growth of 91.1% highlight improving earnings momentum. However, the stock trades at a P/E of 34.7, which is significantly higher than the industry average of 18.2, suggesting overvaluation. The PEG ratio of 2.56 also indicates limited growth relative to valuation. Dividend yield is modest at 0.42%. Technical indicators (RSI 51.1, MACD negative) suggest consolidation. Ideal entry zone lies between ₹1,350–₹1,400, closer to DMA support levels.
📈 Exit Strategy: If already holding, investors should maintain positions for 2–4 years to benefit from earnings growth and sectoral expansion. Partial profit booking can be considered near ₹1,550–₹1,600 (recent highs). Long-term holding is justified due to strong ROE/ROCE and low debt, though valuations remain stretched compared to peers.
✅ Positive
- Strong ROCE (19.7%) and ROE (15.2%) indicate efficient operations.
- Low debt-to-equity ratio (0.17) ensures financial stability.
- Quarterly PAT growth of 91.1% shows strong earnings momentum.
- EPS of ₹39.7 reflects consistent profitability.
- Institutional buying (FII +0.22%, DII +0.07%) supports confidence.
⚠️ Limitation
- High P/E (34.7) compared to industry average (18.2).
- PEG ratio of 2.56 suggests limited growth relative to valuation.
- Dividend yield of 0.42% offers minimal income.
- MACD negative indicates weak short-term momentum.
📉 Company Negative News
- Valuation stretched compared to industry peers.
- Weak technical momentum despite strong fundamentals.
📈 Company Positive News
- Quarterly PAT improved from ₹116 Cr. to ₹130 Cr.
- Strong institutional interest with FII and DII inflows.
- Low leverage supports long-term growth prospects.
🏭 Industry
- Industry PE at 18.2 indicates sector is moderately valued.
- Cables and wires sector benefits from infrastructure and housing demand.
- RR Kabel is well-positioned as a growing player in the industry.
🔎 Conclusion
RR Kabel is a moderately attractive long-term investment candidate with strong ROE/ROCE, low debt, and improving earnings. Ideal entry is around ₹1,350–₹1,400 for better valuation comfort. Existing investors should hold for 2–4 years, with partial profit booking near ₹1,550–₹1,600. While fundamentals are strong, stretched valuations and modest dividend yield require cautious monitoring.