Kabra Drugs (524322)

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

Key Financials

Strengths

• Latest quarter shows ₹30 Cr sales and ₹3 Cr net profit, a 10% net margin.
• Headline P/E of 16.83 is not excessive if current profitability is sustainable.
• Reported profit growth of 575.93% and PEG of 0.03 look optically cheap.
• Piotroski F-score of 5/9 indicates some financial improvement signals.
• Market cap of ₹72 Cr against a profitable quarter suggests room for operating leverage if sales can grow.

Concerns

• ROCE is -7.82%, meaning the core business is not earning a return on capital employed.
• Sales growth is 0.00% while profit growth is 575.93%, implying the profit surge is likely from a low base or one-off, not durable.
• P/B of 6.01 means paying over ₹6 for every ₹1 of book value, with no dividend yield.
• Price of ₹8.30 is below the 52-week low of ₹15.50, indicating serious market distrust or deteriorating fundamentals.

AI Analysis

At ₹8.30, Kabra Drugs looks cheap if you only glance at the P/E of 16.83 and the PEG of 0.03. But the moment I dig deeper, the numbers shout caution. A 575.93% profit growth with sales growth of zero is not a sign of a compounding business; it is often a low-base or one-off event. The latest quarter does show ₹30 Cr sales and ₹3 Cr net profit, a 10% margin, which is respectable. But I can't underwrite quality when the return on capital employed is -7.82%. That means the underlying operations are not earning their cost of capital. The 131% ROE is an optical illusion created by a book value of just ₹1.38 per share; it doesn't mean the franchise is powerful. Meanwhile, I would be paying ₹8.30 for ₹1.38 of book value, or 6.01 times book, with no dividend to compensate. Mr. Market has hammered this stock from ₹35.52 to below ₹15.50, and now it sits at ₹8.30. The market is telling me something. The Piotroski F-score of 5 out of 9 is mediocre, and Debt/Equity is not disclosed, so I cannot even confirm the balance sheet risk. In Graham's language, there is no margin of safety at 6 times book with negative ROCE and stagnant sales. A lucky quarter of ₹3 Cr profit is not a durable edge. I need to see revenue growth, positive ROCE, and honest disclosure before calling this a value investment. Until then, this is speculation, not investment.

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