Deepak Spinners (514030)

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

Key Financials

Strengths

• Price-to-book of 0.66 provides a cushion: price ₹213.40 against book value ₹323.68.
• Piotroski F-Score of 6/9 suggests some improvement in fundamentals.
• Latest quarter is profitable: ₹3 Cr net profit on ₹135 Cr sales.
• Sales growth of 2.42% is modest but positive, showing no severe top-line collapse.

Concerns

• ROCE is -3.67% and ROE is 0.23%, meaning capital is earning far below its cost.
• P/E of 170.06 and 724.44% profit growth are low-base distortions, not dependable indicators.
• No dividend paid, so shareholders get no cash return while waiting for value to unlock.
• Promoter holding and debt/equity are N/A, creating transparency and leverage concerns.

AI Analysis

Let's look at Deepak Spinners from a Graham-Buffett lens. Price is ₹213.40 while book value is ₹323.68 — I am getting about 66 paise of net assets for every rupee. That looks like a classic asset bargain. But the bedrock of value investing is that a low price is only worth paying if the business does not destroy value. The figures here are sobering. ROE is 0.23% and ROCE is minus 3.67%. The assets are not earning their cost of capital. A P/E of 170.06 is not a sign of quality; it is a sign of negligible earnings. The reported profit growth of 724.44% sounds exciting until you realise it is off a very small base. Latest quarter net profit is only ₹3 crore on sales of ₹135 crore, a thin margin. Sales growth is a modest 2.42%, and there is no dividend to reward patient shareholders. Textiles are a commodity, fiercely competitive, with little pricing power — I see no durable moat. Piotroski score is 6/9, which is mildly encouraging, but it does not override the poor return on capital. The PEG ratio of 0.47 is meaningless when the 'G' is a low-base distortion. So this is an asset play, not a franchise. The margin of safety depends entirely on whether that book value is real and whether management can unlock it. I would not chase the stock at ₹213.40 just because it has run from ₹88.65. I need evidence that returns on capital are improving and that the assets are truly worth more than the market price. Until then, a discounted book with negative ROCE is often a value trap, not a bargain.

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