Ambalal Sarabhai (500009)

FairStock Score: 56/100 — STEADY

Score breakdown: P/E: 3/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Profit growth of 93.72% with a trailing P/E of 11.35 (PEG 0.21) suggests the market has not fully priced in earnings recovery.
• Piotroski F-Score of 7/9 indicates improving profitability, operational efficiency, and financial health.
• Sales growth of 13.12% shows the top line is expanding, not just margin gains from cost cuts.
• Stock price has surged from ₹23.12 to ₹68.47 (52-week high), reflecting strong momentum and market recognition.

Concerns

• P/B of 11.22 is extremely rich if the company only earns a 7.49% ROE; paying 11 times book for sub-10% returns is a poor margin of safety.
• Data inconsistency: Book value ₹6.10 and ROE 7.49% imply EPS ~₹0.46, which contradicts the stated P/E of 11.35 (implies EPS ~₹6.03). Earnings quality is questionable.
• Zero dividend yield leaves investors dependent entirely on price appreciation, with no cash return while waiting.
• Latest quarter net profit of ₹4 Cr on ₹52 Cr sales (7.7% margin) is far weaker than the trailing earnings suggest, indicating lumpy/volatile profits.

AI Analysis

At ₹68.47, Ambalal Sarabhai looks like a growth story at first glance. A trailing P/E of 11.35 and 93.72% profit growth are eye-catching, and the Piotroski score of 7/9 suggests the business is improving. But I have to stop and reconcile the numbers before paying a rupee. The book value is only ₹6.10, yet I'm asked to pay ₹68.47 — over 11 times book. A company earning a 7.49% ROE on that book value would generate about 46 paise per share; at ₹68.47, that's a P/E of nearly 150, not 11.35. Something is off. Either the earnings used for the P/E are not sustainable, or the ROE figure is stale. When the balance sheet and income statement tell different stories, I move on. What I do like: the F-score of 7 is a genuine sign of improving fundamentals, and the sales growth of 13.12% is healthy. The total return from the 52-week low of ₹23.12 to ₹68.47 shows the market has already noticed the turnaround. But the latest quarter net profit of only ₹4 crore on ₹52 crore of sales is a 7.7% margin — well below the margin implied by a ₹46 crore trailing profit. That suggests lumpiness. I own businesses, not ticker symbols. Here I see a possible turnaround at a high P/B, no dividend, and an unexplained accounting inconsistency. The PEG of 0.21 only looks cheap if the profit growth is durable. I would wait for more clarity and better evidence that the ROE is improving toward double digits.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer