Rose Merc. (512115)

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

Key Financials

Strengths

• Sales growth of 620.13% and profit growth of 72.34% show strong short-term momentum.
• Latest quarter delivered ₹21 Cr sales and ₹3 Cr net profit, implying a 14% net margin — robust for a trader/distributor.
• P/E of 13.68 is reasonable if the current earnings level is sustained.
• Piotroski F-Score of 7/9 suggests decent recent financial health.
• ROCE of 32.01%, if verified, indicates efficient use of capital employed.

Concerns

• Reported ROE is only 1.95%, well below the level a 2.84 P/B demands; either earnings quality or capital structure needs scrutiny.
• Debt/Equity and promoter holding are N/A, creating a lack of transparency on leverage and promoter alignment.
• 620% sales growth in a low-moat trading business is more likely to be a one-off spike than durable compounding; margin of safety is absent at the 52-week high.
• Dividend yield of 0.17% means no income support while waiting, so all returns depend on reinvestment and growth.

AI Analysis

I approach Rose Merc. the way I'd approach any small trading business — with suspicion. A 620% sales jump and 72% profit jump sounds wonderful, but in trading and distribution, growth can disappear as quickly as it appears. The latest quarter shows ₹21 crore sales and ₹3 crore net profit, a 14% margin that is unusually rich for a distributor. I need to know if this is durable franchise economics or a temporary product cycle. At ₹121.70, the stock sits at its 52-week high. I am paying 13.68 times trailing earnings and 2.84 times book value for a company whose reported return on equity is a meagre 1.95%. That tells me shareholder equity is not compounding at a satisfactory rate. Management claims 32% ROCE, but with debt/equity and promoter holding not provided, I cannot verify the capital structure or the skin in the game. In India, an absent promoter holding figure is a warning, not a detail. The Piotroski score of 7/9 is reassuring, but it measures the last few quarters, not the next decade. A PEG of 0.04 means nothing when base-year earnings are tiny and growth has been explosive — if the growth normalises, the 'bargain' disappears. This looks like a fast grower, but a fast grower without a moat is a speedboat on a rough sea. I would want audited accounts, cash-flow proof, and at least two more quarters of this run rate before I part with my capital. The price is at its high, so there is no margin of safety. Patience, not excitement, is the investor's best friend.

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