Amarjothi Spg. (521097)

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

Key Financials

Strengths

• Trades at a 28% discount to book value: P/B 0.72 versus book value of ₹288.44.
• Low trailing P/E of 8.10 suggests an apparent earnings yield of roughly 12%.
• Provides a modest dividend yield of 1.59% for patient shareholders.
• Still profitable despite the downturn, with positive net profit in the latest quarter.
• Price is at the top of its 52-week range, indicating some market interest.

Concerns

• Sales fell 31.43% and profit fell 34.84%, showing serious business deterioration.
• Latest quarterly net profit of only ₹1 Cr on ₹28 Cr sales implies a razor-thin margin and weak current earnings power.
• Piotroski F-Score of 3/9 signals poor financial health and weak operating efficiency.
• ROE of 6.02% is low and inadequate for an asset-heavy textile business; data on debt/equity and promoter holding is missing.

AI Analysis

At ₹206.70, I am being asked to pay ₹72 for every ₹100 of book value, since book value is ₹288.44. That sounds like the kind of margin of safety Graham taught. But a cheap price is not enough; the business must also earn acceptable returns on that book. Here Amarjothi earns only 6.02% on equity and 9.84% on capital employed. Those numbers are modest for a textile company facing strong competition and cyclical demand. The recent record worries me: sales have fallen 31.43% and profits 34.84%. The latest quarter shows sales of ₹28 Cr and net profit of just ₹1 Cr—a margin of roughly 3.5%. If that is the new run-rate, the trailing P/E of 8.10 overstates earnings quality. The Piotroski score is 3/9, indicating weak financial health and poor operating efficiency. I cannot ignore that. There is a dividend yield of 1.59%, which gives shareholders some return while waiting, but it does not compensate for declining fundamentals. Debt/equity and promoter holding are not available, so I am flying without a full instrument panel. This looks more like a cigar butt than a wonderful business. Textile products are generally commodity-like; I see no moat here. Buying below book can work only if management creates value with those assets. The evidence—falling sales, falling profits, low F-score—points to value destruction, not value creation. I would want to see several quarters of stabilisation, checks on debt and cash flow, and management’s capital-allocation record before parking capital. As of now, this is an asset play at best, and a value trap at worst. Benjamin Graham would say: price is what you pay, value is what you get. Here the gap exists on the balance sheet, but the income statement does not yet validate it.

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