Fermenta Biotec. (506414)

FairStock Score: 24/100 — RISKY

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

Key Financials

Strengths

• Trailing ROE and ROCE of 22.87% and 22.97% indicate efficient capital use before the recent downturn.
• P/E of 10.82 is low relative to the market, though it must be read with caution.
• Book value of ₹107.02 provides some tangible per-share support against the ₹238.50 price.
• Latest quarter is still profitable at ₹12 Cr net profit on ₹137 Cr sales.

Concerns

• Sales growth of -12.21% and profit growth of -61.56% show severe deterioration in demand and operating leverage.
• Piotroski F-Score of 3/9 signals poor financial health and rising risk.
• Current price ₹238.50 is below the 52-week low of ₹256.40, indicating persistent selling pressure.
• Debt/Equity and promoter holding are N/A; key risk indicators are missing, and FairStock Score is 24/100.

AI Analysis

Let me begin with the numbers as they are, not as I wish them to be. At ₹238.50, Fermenta Biotec carries a market cap of ₹715 Cr, a P/E of 10.82, and a P/B of 2.23. The trailing ROE of 22.87% and ROCE of 22.97% look attractive. However, I have learned that a single year's return can deceive. Sales are down 12.21%, and profits have collapsed 61.56%. That is the signature of a cyclical or impaired business, not a durable compounder. The latest quarter tells the same story: ₹137 Cr of sales and ₹12 Cr of net profit. Annualised, that profit puts the price closer to 15 times earnings, not the 10.8 the trailing P/E suggests. The Piotroski F-score of 3/9 is a serious red flag; it indicates deteriorating financial health, not a business on the mend. Book value of ₹107.02 provides some cushion, but at 2.23 times book I am not getting assets at a bargain. Dividend yield of 0.77% offers little reward while I wait. The stock trades at ₹238.50, below its 52-week range of ₹256.40 to ₹376.00; the market is already voting no. FairStock Score of 24/100 reinforces the risk. I also worry that debt/equity and promoter holding are not disclosed; as Graham would say, an investment without full information is a speculation. For me, the margin of safety must come from earnings power that is stable and growing. Here, earnings power is shrinking. I would wait for sales to stabilise, margins to recover, and the F-score to climb above 4 before using my capital. At this price, I do not have enough conviction to call it attractive.

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