ETERNAL - Swing Trade Analysis with AI Signals

Last Updated Time : 20 Dec 25, 07:01 am

Swing Trade Rating: 3.2

📊 ETERNAL shows weak potential for swing trading despite strong quarterly profit growth. The fundamentals are stretched with a very high P/E (117 vs industry 42.2), low ROCE (7.34%), and ROE (6.55%). Technical indicators (RSI 38.0, MACD negative) suggest bearish momentum. The stock is trading below its 50 DMA (305 ₹) and near its 200 DMA (287 ₹), indicating weakness. Optimal entry would be closer to 270–275 ₹. If already holding, consider exiting near 310–320 ₹ if momentum improves.

✅ Positive

• 📈 Strong quarterly PAT growth (691 Cr. vs 602 Cr., +64.1%).
• 💰 Very low debt-to-equity (0.01) ensures financial stability.
• 📊 DII holdings increased (+3.55%), showing domestic investor confidence.
• 📉 Large market cap (2,76,000 Cr.) provides liquidity and stability.

⚠️ Limitation

• 📉 Extremely high P/E ratio (117) compared to industry average (42.2).
• 📊 Weak ROCE (7.34%) and ROE (6.55%) indicate poor capital efficiency.
• 📉 RSI at 38.0 and MACD (-6.68) show bearish momentum.
• 📉 Current trading volume significantly below 1-week average, indicating reduced participation.
• 📊 EPS of 2.45 ₹ is low relative to valuation.

🚨 Company Negative News

No major negative news reported, but reduced FII holdings (-3.30%) highlight declining foreign investor confidence.

🌟 Company Positive News

Strong quarterly profit growth and rising DII interest highlight resilience despite valuation concerns.

🏭 Industry

The industry trades at an average P/E of 42.2. ETERNAL trades at a steep premium (117), reflecting growth expectations but also significant overvaluation risk.

📌 Conclusion

ETERNAL is a risky candidate for swing trading due to weak fundamentals and high valuation. Entry near 270–275 ₹ is optimal for risk-tolerant traders. Exit strategy should target 310–320 ₹ if momentum strengthens. Caution is advised given overvaluation, weak technical indicators, and declining foreign investor interest.

I can also prepare a side-by-side comparison with other large-cap stocks trading at high P/E multiples to see if ETERNAL offers better or worse swing trade potential. Would you like me to set that up?