Sandu Pharma. (524703)

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

Key Financials

Strengths

• Piotroski F-Score of 7/9 suggests solid operating health and limited financial stress.
• P/B of 1.36 with book value of ₹42.68 provides some downside cushion near the 52-week high of ₹58.11.
• P/E of 16.49 and PEG of 0.43 look reasonable if the 75% earnings growth proves sustainable.
• Low leverage is implied by ROCE of 5.47% being close to ROE of 5.01%, so balance sheet risk appears contained.
• Dividend yield of 2.29% provides modest income while awaiting value recognition.

Concerns

• ROE of 5.01% and ROCE of 5.47% indicate weak capital efficiency, not the hallmark of a durable moat.
• Sales growth of only 2.12% means the 75% profit growth is likely a low-base effect or a temporary margin blip.
• Latest quarter net profit of ₹1 crore on ₹19 crore of sales is a thin net margin; sustainability is unproven.
• Very small market cap of ₹56 crore and undisclosed promoter holding add liquidity and governance uncertainty.

AI Analysis

At first glance, Sandu Pharma reminds me of a small, unexciting business. A market cap of ₹56 crore, a P/E of 16.49, and a P/B of 1.36 against a book value of ₹42.68. The headline profit growth of 75% naturally makes one lean forward. But Graham taught me to look behind the headline. Sales grew only 2.12%. Last quarter, ₹19 crore of sales produced only ₹1 crore of net profit. That is a thin margin. So this earnings jump is more likely a base effect or a one-time margin improvement, not a compounding franchise. ROE is 5.01% and ROCE is 5.47%. Those are mediocre numbers; a wonderful business should consistently earn above its capital cost. On the positive side, there appears to be little financial leverage, and a Piotroski score of 7/9 suggests the fundamentals are not deteriorating. The dividend yield of 2.29% offers modest compensation. At ₹58.11, the stock is at the top of its 52-week range. I am not willing to pay 16.5 times earnings for a business growing sales at 2%. If the 75% profit growth is sustainable, the stock is cheap, but one quarter does not make a trend. I would file this as a slow grower on my watchlist, wait for evidence of durable demand, higher ROE, and a larger margin of safety. There is no frantic rush; in investing, patience is a virtue.

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