Nirlon (500307)

FairStock Score: 51/100 — MIXED

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

Key Financials

Strengths

• Extraordinary capital efficiency: ROE 86.51% and ROCE 30.18%
• Profit growth 18.90% outpacing sales growth 5.32%, showing margin expansion/operating leverage
• Reasonable earnings valuation: P/E 13.63 with a 5.23% dividend yield
• Healthy Piotroski F-Score of 7/9 indicating sound financials

Concerns

• Top-line growth weak at just 5.32%; sales are not compounding briskly
• Price-to-book 9.93 with book value ₹42.37 means paying a hefty premium over stated net assets
• Current price ₹420.90 is below the 52-week low of ₹445, reflecting negative price momentum
• Debt/equity and promoter holding data are not available, leaving leverage and ownership alignment unverified

AI Analysis

Let's assess Nirlon as Graham and Buffett would. The first numbers that jump out are an 86.51% ROE and 30.18% ROCE. Those are exceptional; a business that can earn nearly 87 rupees on every 100 rupees of equity has an unusual economic characteristic. But I must be careful with a price-to-book of 9.93 and book value of only ₹42.37. I am paying ₹420.90 for ₹42.37 of stated book; the market is paying for the franchise, not the net assets. The 13.63 P/E tempers that premium, and a 5.23% dividend yield rewards me while waiting. Profit growth of 18.90% against sales growth of 5.32% suggests margins and operating leverage are doing the heavy lifting. That can be good, but it also means top-line isn't driving the story. Sales growth of only 5.32% would not satisfy me as a compounding machine; it points to a mature, stable business rather than a fast grower. The Piotroski score of 7/9 tells me the financial condition is decent. Yet I lack debt/equity and promoter holding data; in India, promoter alignment matters, and I won't blind myself. The stock sits at ₹420.90, below the 52-week range of ₹445-633, so Mr. Market is unhappy. I need evidence the recent results—quarterly sales ₹170 Cr, net profit ₹69 Cr—are repeatable. Valuation is reasonable on earnings, but high on book. FairStock score of 51 calls it mixed. I would categorize this as a Stalwart: steady, profitable, dividend-paying, but not a rapid grower. I'd wait for a margin of safety or proof that profit growth isn't just a one-time margin bump.

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