Indag Rubber (509162)

FairStock Score: 28/100 — RISKY

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

Key Financials

Strengths

• Piotroski F-Score of 7/9 suggests improving financial health across profitability, leverage and efficiency.
• Dividend yield of 2.44% provides a small income cushion while waiting for fundamentals to improve.
• Latest quarter is profitable: ₹56 Cr sales and ₹3 Cr net profit, so the business is not in distress.
• Book value of ₹92.78 and P/B of 2.42 show some asset backing, though not cheap.
• Sales growth is positive at 0.88%, indicating the business is at least stable, not shrinking.

Concerns

• P/E of 30.09 looks expensive for a business with ROE of only 4.52% and ROCE of 2.93%.
• Sales growth of 0.88% is nearly flat; the 539% profit growth is likely a low-base effect, not sustainable compounding.
• Latest quarterly net margin is only about 5.4%, reflecting weak pricing power in the tyres and rubber segment.
• Stock trades at the top of its 52-week range (₹83 to ₹224.70) with a FairStock Score of 28/100, leaving little margin of safety; Debt/Equity and promoter holding are also undisclosed.

AI Analysis

When I look at Indag Rubber, I try to strip away the glamour of a stock that has moved from ₹83 to ₹224.70. At ₹224.70, I am being asked to pay ₹602 Cr for a tyre and rubber business that earned only about ₹20 Cr — hence a P/E of 30.09. The book value is ₹92.78, so the market price is 2.42 times what a conservative accountant would say the owners own. That alone destroys the margin of safety I demand. Inside the business, the numbers are even more sobering: return on equity is just 4.52% and return on capital employed is a meagre 2.93%. A business that cannot generate much more on its owners' capital than a fixed deposit is not compounding wealth, no matter how high the stock goes. Sales grew by only 0.88%, and the latest quarter shows ₹56 Cr of sales producing just ₹3 Cr of net profit. That is a 5.4% margin, at best ordinary. The reported profit growth of 539% looks spectacular, but with sales flat, I regard it as a base-effect bounce, not a durable trend. The PEG of 0.07 is an illusion; Graham would never value a company on one extraordinary earnings number. To be fair, the Piotroski score of 7/9 hints at recent improvement in financial health, and the 2.44% dividend gives a small payment while you wait. But I cannot ignore the FairStock Score of 28, which labels this risky, or the fact that the stock is sitting at the top of its 52-week range. A good business purchased at a sensible price is a sound investment; this one is a low-return business at a premium price. I would wait for either a much cheaper price or evidence of sustained high returns before putting any money here.

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