Cravatex (509472)

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

Key Financials

Strengths

• Sales growth of 13.44% shows moderate business expansion.
• ROE of 17.99% is respectable, indicating decent return on shareholders' equity.
• Dividend yield of 3.35% provides income support at the current price.
• Piotroski F-Score of 7/9 suggests recent financial health and improving fundamentals.

Concerns

• Latest quarter net profit margin is only about 2.7% (₹1 Cr profit on ₹37 Cr sales), showing thin and fragile profitability.
• ROCE of 6.57% is far below ROE, implying weak return on total capital and possible reliance on leverage.
• P/B of 6.36 is expensive for a trading/distribution business given book value of ₹73.86 and price of ₹470.
• Debt/Equity and promoter holding are not disclosed, leaving balance sheet and governance risks unassessed.

AI Analysis

Reading Cravatex, I am reminded that a good business is better than a good stock. This is a trader and distributor, and in my experience, distributors rarely possess a durable moat. Power lies with the principals whose goods they sell, and with customers who can switch. The numbers confirm my caution. Last quarter’s net profit was ₹1 crore on sales of ₹37 crore – a margin of about 2.7%, which is thin and vulnerable. The headline profit growth of 440% looks eye-catching, but a single year’s jump from a small base tells me little about earning power. Reported P/E of 14.49 on trailing earnings is modest, yet the market cap of ₹123 crore against an annualized latest-quarter profit of roughly ₹4 crore implies a much more demanding multiple if current margins are the new normal. Book value is ₹73.86, so paying ₹470 means 6.36 times book. That is a high price for a distributor. ROE of 18% sounds fine, but ROCE is only 6.57%, which suggests the return on total capital is poor and perhaps the business relies on leverage. The divergence bothers me. Dividend yield of 3.35% offers some shareholder reward, and a Piotroski score of 7/9 indicates recent financial health. Sales growth of 13.44% is respectable. But I cannot assess debt because the data is missing, and promoter holding is also unknown. In investing, what you don’t see can hurt you. PEG of 0.06 assumes 440% growth will persist; that is statistically naive. This feels like a turnaround situation, not a long-term compounding machine. The price sits at the top of its 52-week range, so the market has already noticed. I prefer to wait for a better margin of safety and clearer evidence of durable returns.

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