Nitta Gelatin (506532)

FairStock Score: 58/100 — STEADY

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

Key Financials

Strengths

• High ROE of 27.45% and ROCE of 24.65% indicate strong capital efficiency and a likely competitive edge.
• Attractive valuation with P/E of 9.43, P/B of 2.01, and PEG of 0.45 despite strong profit growth of 30.41%.
• Piotroski F-Score of 7/9 suggests sound operating health and lower accounting red flags.
• Latest quarter revenue of ₹150 Cr and net profit of ₹26 Cr show current earnings traction.

Concerns

• Stock trades near its 52-week low of ₹802 against a high of ₹1,602, implying possible cyclicality or market skepticism.
• Profit growth of 30.41% is far ahead of sales growth of 11.20%, so margin expansion may not be durable.
• Dividend yield is just 0.71%, offering limited income support to shareholders.
• Debt/equity is not disclosed, making the true balance-sheet leverage risk unclear.

AI Analysis

I start with the balance-sheet and profit quality that Graham would demand. Nitta Gelatin earns a 27.45% return on equity and 24.65% return on capital employed, both excellent for a specialty-chemicals player. The Piotroski F-Score of 7 out of 9 adds confidence that this is not just reported accounting profit; the operating engine looks healthy. At today's price of ₹802, I pay 9.43 times earnings and 2.01 times book value. For a business with 30.41% profit growth and 11.20% sales growth, the PEG ratio of 0.45 is surprisingly low. That is the kind of asymmetry I look for: market pessimism, decent fundamentals, and reasonable valuation. However, I must respect the tape. The shares have fallen from ₹1,602 to ₹802 in a year. A 50% drawdown in a growing company is either a gift or a warning. The latest quarter shows revenue of ₹150 Cr and net profit of ₹26 Cr; if sustained, that supports the earnings power. But sales growth is less than half of profit growth, so margins are doing the heavy lifting. I have to ask whether this is pricing power or merely a temporary raw-material tailwind. Dividend yield of just 0.71% does not compensate me while I wait, and with debt-equity not provided, I cannot fully assess the leverage risk. Graham would say valuation is not the whole story; durability matters. I would only call this a Fast Grower if the margin expansion can be repeated over multiple cycles. The low P/E gives a margin of safety, but a low P/E in a cyclical peak can deceive. I would start a small position only after confirming that quarterly profit growth survives cost pressure, demand changes, and competitive response.

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