WOCKPHARMA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.4
| Stock Code | WOCKPHARMA | Market Cap | 22,931 Cr. | Current Price | 1,413 ₹ | High / Low | 1,870 ₹ |
| Stock P/E | 163 | Book Value | 178 ₹ | Dividend Yield | 0.00 % | ROCE | 4.40 % |
| ROE | -0.53 % | Face Value | 5.00 ₹ | DMA 50 | 1,385 ₹ | DMA 200 | 1,395 ₹ |
| Chg in FII Hold | -0.10 % | Chg in DII Hold | -0.45 % | PAT Qtr | 54.0 Cr. | PAT Prev Qtr | 69.0 Cr. |
| RSI | 54.1 | MACD | -10.0 | Volume | 8,54,933 | Avg Vol 1Wk | 5,18,440 |
| Low price | 1,110 ₹ | High price | 1,870 ₹ | PEG Ratio | 6.73 | Debt to equity | 0.76 |
| 52w Index | 39.9 % | Qtr Profit Var | 250 % | EPS | 8.68 ₹ | Industry PE | 29.1 |
📊 Analysis: Wockhardt Pharma trades at a very high P/E of 163 compared to the industry average of 29.1, indicating extreme overvaluation. ROE (-0.53%) is negative and ROCE (4.40%) is weak, reflecting poor capital efficiency. EPS of ₹8.68 is modest relative to valuation, and dividend yield is 0%, offering no income support. Debt-to-equity is high at 0.76, raising leverage concerns. Quarterly PAT declined from ₹69 Cr to ₹54 Cr, showing weak earnings momentum despite a YoY profit variation of +250%. PEG ratio of 6.73 further highlights poor growth-adjusted valuation. Technicals show RSI at 54.1 (neutral) and MACD negative (-10.0), suggesting weak momentum. Overall, fundamentals do not support long-term compounding.
💰 Entry Price Zone: Ideal accumulation zone is between ₹1,100 – ₹1,200, closer to its 52-week low, offering margin of safety. Current levels are risky given stretched valuations.
⏳ Exit / Holding Strategy: If already holding, consider exiting on rallies near ₹1,600 – ₹1,700 (resistance zone). Long-term holding is not advisable unless ROE/ROCE improve significantly and debt levels reduce. The stock is better suited for speculative traders rather than long-term investors.
Positive
- 📈 EPS of ₹8.68 provides earnings base.
- 💡 Profit variation (+250%) shows turnaround potential.
- 🏦 Strong trading volumes ensure liquidity.
Limitation
- ⚠️ Extremely high P/E (163) vs industry average (29.1).
- 📉 Negative ROE (-0.53%) and weak ROCE (4.40%).
- 🚫 No dividend yield (0%), limiting investor returns.
- 🔻 High debt-to-equity (0.76), raising financial risk.
- 📉 PEG ratio (6.73) indicates poor growth-adjusted valuation.
Company Negative News
- 📉 PAT declined from ₹69 Cr to ₹54 Cr.
- 🚫 Both FII (-0.10%) and DII (-0.45%) reduced holdings.
Company Positive News
- ✅ YoY profit variation (+250%) shows recovery potential.
- 💡 EPS stability despite weak fundamentals.
Industry
- 🏭 Pharma industry PE ~29.1, much lower than Wockhardt’s valuation.
- 🌍 Sector growth driven by generics, exports, and healthcare demand, but Wockhardt lags peers in profitability.
Conclusion
Wockhardt Pharma is overvalued with weak ROE/ROCE, high debt, and declining profitability, making it unsuitable for long-term investment. Ideal entry is near ₹1,100–₹1,200 for speculative positions. Existing holders should consider exiting near ₹1,600–₹1,700 unless fundamentals improve. The stock suits short-term traders but not long-term compounding investors.
Selva, would you like me to extend this into a peer benchmarking overlay (Wockhardt vs Sun Pharma, Dr. Reddy’s, Cipla, etc.) so you can evaluate sector rotation and margin-of-safety positioning more clearly?