Jyoti Resins (514448)

FairStock Score: 32/100 — RISKY

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

Key Financials

Strengths

• Exceptional profitability with ROE of 36.54% and ROCE of 49.98%
• Low absolute P/E of 14.52 if earnings can stabilise
• Stock trading at its 52-week high shows strong market demand
• Latest quarter net margin of roughly 20.8% indicates pricing power

Concerns

• Profit growth is negative at -19.36% while sales growth is only 1.72%
• P/B of 8.67 offers little asset-backing comfort or margin of safety
• Piotroski F-score of 4/9 suggests deteriorating financial health
• Latest quarterly profit of ₹15 Cr implies weaker earnings run-rate than the trailing P/E suggests

AI Analysis

At first glance, Jyoti Resins looks like the kind of business that would attract my attention: a specialty chemicals company earning a stunning ROE of 36.54% and ROCE of 49.98%, with a debt/equity ratio listed as N/A. That combination initially suggests a nimble, high-return operation. But I must not confuse a wonderful business with a wonderful investment. The stock is at its 52-week high of ₹1,400.55, while the underlying business is not growing: sales rose only 1.72% and profits fell 19.36%. For an owner, paying ₹1,697 crore for a company whose earnings are shrinking requires strong confidence in a turnaround. The trailing P/E of 14.52 looks modest, but the P/B of 8.67 tells me I am paying heavily relative to book value of just ₹161.50 per share. The latest quarter's profit of ₹15 crore on sales of ₹72 crore annualizes to roughly ₹60 crore, which is far below the ₹117 crore implied by the market cap and P/E. That gap worries me. The Piotroski F-score of 4/9 and PEG of 8.44 reinforce a picture of deteriorating fundamentals, not improving ones. Graham would insist on a margin of safety; here, the dividend yield is just 1.07%, and the price leaves little room for error. The FairStock score of 35/100 is consistent with my caution. High returns do not matter if the earnings base is eroding and the price already reflects perfection. This is a business to study and wait for, not a bargain to buy. I would need clear evidence that profits have stabilised and sales growth has re-accelerated before I commit any capital.

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