USHAMART - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | USHAMART | Market Cap | 12,845 Cr. | Current Price | 422 ₹ | High / Low | 498 ₹ |
| Stock P/E | 38.9 | Book Value | 52.2 ₹ | Dividend Yield | 0.71 % | ROCE | 26.6 % |
| ROE | 21.1 % | Face Value | 1.00 ₹ | DMA 50 | 430 ₹ | DMA 200 | 406 ₹ |
| Chg in FII Hold | 0.48 % | Chg in DII Hold | 1.82 % | PAT Qtr | 84.0 Cr. | PAT Prev Qtr | 97.3 Cr. |
| RSI | 48.4 | MACD | -8.89 | Volume | 5,05,113 | Avg Vol 1Wk | 6,50,132 |
| Low price | 279 ₹ | High price | 498 ₹ | PEG Ratio | 2.22 | Debt to equity | 0.03 |
| 52w Index | 65.4 % | Qtr Profit Var | 8.99 % | EPS | 9.94 ₹ | Industry PE | 19.5 |
📊 Analysis: Ushamart (USHAMART) shows strong fundamentals with ROE at 21.1% and ROCE at 26.6%, reflecting efficient capital utilization. Debt-to-equity is extremely low (0.03), ensuring financial stability. EPS of ₹9.94 and quarterly profit growth (+8.99%) highlight operational strength. However, the stock trades at a P/E of 38.9, which is nearly double the industry average of 19.5, suggesting overvaluation. PEG ratio of 2.22 indicates moderate growth-adjusted valuation. Technicals show consolidation with RSI at 48.4 and MACD negative (-8.89).
💰 Entry Price Zone: Ideal accumulation zone is between ₹390 – ₹410, closer to DMA200 (₹406) and below DMA50, offering margin of safety.
⏳ Exit / Holding Strategy: If already holding, maintain with a long-term horizon (5+ years) given strong ROE/ROCE and low debt. Consider partial profit booking near ₹480 – ₹498 (recent high zone) if valuations remain stretched. Dividend yield (0.71%) provides minor income support, but the main appeal lies in compounding potential.
Positive
- ⚡ Strong ROE (21.1%) and ROCE (26.6%) indicate efficient capital use.
- 📈 Quarterly profit growth (+8.99%).
- 🏦 Very low debt-to-equity (0.03), ensuring balance sheet strength.
- ✅ Both FII (+0.48%) and DII (+1.82%) increased holdings, showing institutional confidence.
Limitation
- ⚠️ High P/E (38.9) vs industry average (19.5).
- 📉 PEG ratio of 2.22 suggests moderate growth-adjusted value.
- 🔻 Technical indicators (MACD negative, RSI neutral) show weak momentum.
Company Negative News
- 📉 PAT declined sequentially from ₹97.3 Cr to ₹84 Cr.
- 🚫 Valuations remain stretched compared to peers.
Company Positive News
- ✅ Quarterly profit growth (+8.99%) despite sequential decline.
- 💡 Strong institutional support with increased FII and DII holdings.
Industry
- 🏭 Capital goods industry PE ~19.5, lower than USHAMART’s valuation.
- 🌍 Sector growth driven by infrastructure expansion and industrial demand.
Conclusion
USHAMART is fundamentally strong with high ROE/ROCE and negligible debt, making it a good candidate for long-term investment. However, valuations are stretched, so ideal entry is near ₹390–₹410. Existing holders should maintain positions for long-term compounding but consider partial exit near ₹480–₹498 if earnings growth does not accelerate. The stock is best suited for disciplined investors focusing on margin of safety and sustainable growth.
Selva, since you’re benchmarking systematically, would you like me to prepare a peer overlay comparison (Ushamart vs ABB India, Siemens, etc.) with valuation and growth metrics? That would give you sharper clarity for sector rotation and basket construction.