Suraj Products (518075)

FairStock Score: 24/100 — RISKY

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

Key Financials

Strengths

• Return on capital employed of 17.45% shows reasonably efficient use of capital.
• Piotroski F-Score of 6/9 suggests moderately sound financial health despite the cyclical downturn.
• Profitability was maintained: net profit grew 1.25% even as sales declined, indicating some margin resilience.
• Company remains profitable at the latest quarter with ₹4 Cr net profit on ₹66 Cr sales.
• Modest dividend yield of 0.86% provides a small income cushion.

Concerns

• Sales growth is negative at -2.56%, typical of a down-cycle commodity business.
• Valuation is stretched: P/E of 17.29 and P/B of 5.31 against a book value of only ₹125.08.
• PEG of 13.83 is extremely high, meaning the price offers almost no compensation for the feeble 1.25% profit growth.
• Stock has already run from ₹156.20 to ₹664.45 in 52 weeks, raising speculative froth risk; FairStock Score of 22/100 flags it as risky.

AI Analysis

Let me apply the same test I would to any business. Suraj Products is an iron and steel producer—a commodity business. In such businesses, the only durable advantage is low cost or a special niche; the data don't show me one. Sales have actually fallen 2.56%, while profit managed a tiny 1.25% rise. That is not a growth story. The latest quarter earned only ₹4 Cr on ₹66 Cr sales—a thin margin. At ₹664.45, I’m paying 17.29 times earnings and 5.31 times book value of ₹125.08. For a business earning 11.38% on equity and 17.45% on capital, that is not a bargain; it’s a price that assumes great things ahead. The 52-week range tells me the stock went from ₹156.20 to ₹664.45. When a cyclical commodity stock quadruples while sales decline, I get uncomfortable. Graham taught me to buy with a margin of safety; here the safety seems missing. The Piotroski score of 6/9 is decent, and the company is profitable, so it is not a melting ice cube. But the PEG ratio of 13.83 is absurd: you are paying a high multiple for almost no growth. Dividend yield of 0.86% gives me almost nothing while I wait. I would call this a cyclical whose current price has run far ahead of its fundamentals. FairStock score of 22/100 echoes my caution. If steel prices soften, a high price-to-book commodity stock can fall quickly. I would wait for a much lower price, or evidence that earnings can catch up to the market’s enthusiasm. In the meantime, my rule remains: 'Be fearful when others are greedy.'

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