Magna Electrocas (517449)

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

Key Financials

Strengths

• ROE of 17.24% and ROCE of 25.07% indicate historically efficient capital use.
• Sales growth of 11.22% shows demand is still expanding.
• P/B of 1.57 against book value of ₹296.79 offers some asset-backed downside cushion.
• Latest quarter net profit of ₹4 Cr on sales of ₹48 Cr implies a reasonable operating margin.

Concerns

• Profit growth fell 22.84% despite sales growth, signaling margin pressure.
• Piotroski F-Score of 4/9 points to weak overall financial health.
• Current price of ₹466.80 sits below the quoted 52-week low of ₹706, indicating a sharp decline or possible data anomaly.
• Dividend yield of only 0.61% provides little income support while waiting for recovery.

AI Analysis

At ₹466.80, Magna Electrocas is a small-cap worth a closer look, but not a business I'd rush into. The economics are mixed. Return on equity of 17.24% and ROCE of 25.07% tell me management has historically deployed capital reasonably well. However, the latest quarter's net profit of ₹4 Cr on sales of ₹48 Cr, and a year-on-year profit decline of 22.84%, show the headwinds are real. Sales growth of 11.22% is respectable, but without commensurate profit growth, it may be growth at the wrong price. The Piotroski F-Score of 4/9 is a red flag; it suggests deteriorating fundamentals, not the improving financials I look for. Valuation is not comfortable: P/E of 20.08 on falling earnings, and a PEG of 1.79. I prefer a margin of safety; here I don't see it. The price is even quoted below the 52-week low of ₹706, which makes me wonder if there is a data inconsistency or the market is pricing in a serious deterioration. The dividend yield of 0.61% is negligible. On the positive side, P/B of 1.57 against book value of ₹296.79 provides some asset support. But book value doesn't create returns; the business must earn it. This looks like a cyclical company in a challenging castings and forgings environment. Without a moat, with falling profits and weak financial health signals, I'd keep this on my watchlist rather than in my portfolio. I need clearer evidence that earnings have bottomed and capital allocation remains disciplined.

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