Majestic Auto (500267)

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

Key Financials

Strengths

• Trading at a 40% discount to book value: P/B 0.60 against book value of ₹601.50
• Dividend yield of 3.33% provides some income while waiting for value to unlock
• Reported ROE of 17.47% and profit growth of 280.46% suggest some earnings momentum
• Piotroski F-Score of 6/9 indicates no immediate fundamental deterioration
• Low PEG ratio of 0.06 on reported earnings makes the headline valuation look cheap

Concerns

• Sales growth of -80.28% and latest quarter sales of only ₹3 Cr show the core business has nearly vanished
• ROCE of just 4.05% reflects poor returns on the operating capital employed
• Net profit of ₹5 Cr exceeds sales of ₹3 Cr in the latest quarter, implying heavy reliance on non-operating or exceptional income
• Data is insufficient and internally inconsistent: reported ROE, P/E, and P/B do not reconcile into a clean earnings picture

AI Analysis

At ₹360, Majestic Auto offers an interesting book-value proposition: a P/B of 0.60 against a stated book value of ₹601.50. That is a classic Graham-style margin of safety, and a 3.33% dividend while waiting is pleasant. But as Buffett would say, a low price only matters if the asset produces reasonable returns. Here the picture is muddled. Sales collapsed 80% and the latest quarter shows only ₹3 Cr of turnover; yet net profit is ₹5 Cr. That means the reported profit is not coming from a thriving operating business — it is likely from investments, land, or other non-core income. With ROCE of just 4.05%, the underlying commercial services operation earns little on capital. The high reported ROE of 17.47% sits awkwardly with a P/E of 16.47 on a ₹375 Cr market cap; backing into earnings suggests roughly ₹22-23 Cr, which is less than 4% of book value. One of these numbers is not giving a clear operating picture. The 280% profit growth and PEG of 0.06 look seductive, but with sales down 80%, I cannot trust the quality of earnings. Piotroski 6/9 is decent, but it does not tell me whether the earnings are repeatable. This is not a wonderful business with a moat; it is an asset play, perhaps a holding-company situation. My discipline says you can buy a rupee of assets for 60 paise, but only if you can eventually unlock the value. I would require a long history of capital allocation and concrete plans for that book value, otherwise the 40% discount is just a value trap wearing a dividend.

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