Nikhil Adhesives (526159)

FairStock Score: 23/100 — RISKY

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

Key Financials

Strengths

• ROCE of 17.08% indicates decent capital efficiency for a specialty chemical player.
• ROE of 12.65% is respectable and shows some shareholder return.
• Profit grew 9.22% despite flat sales, suggesting margin or mix improvement.
• Piotroski F-Score of 6/9 points to reasonably stable fundamentals.

Concerns

• Top line is stagnant: sales growth -0.85%; latest quarter net margin is only ~3% (₹4 Cr on ₹133 Cr sales).
• Valuation is rich for the growth: P/E 19.27, P/B 4.73, PEG 2.09—no margin of safety.
• FairStock Score 28/100 labels the stock risky; dividend yield is just 0.34%, so shareholders aren't paid to wait.
• Debt/Equity and promoter holding are N/A, making governance and leverage hard to judge.

AI Analysis

Looking at Nikhil Adhesives, I start with business quality. It’s a specialty chemicals player, but I don’t see strong evidence of an economic moat. Latest quarter sales of ₹133 Cr produced only ₹4 Cr net profit—thin margin near 3%. Over the year, sales actually dipped 0.85%, so top line is stagnant; profit grew 9.22%, likely from cost or product mix, not underlying demand. As Graham would ask: is this growth sustainable? With PEG at 2.09, the market is paying more than twice the growth rate, so there's no margin of safety. On financial health, ROE of 12.65% and ROCE of 17.08% are respectable, and Piotroski score of 6/9 suggests moderate balance-sheet quality. But book value is only ₹27.45; at ₹129.90, I'm paying 4.73 times book. That’s a rich price for a company with flat sales and a 0.34% dividend yield. The market cap is ₹603 Cr—small, so liquidity and governance risks need extra attention; promoter holding isn't disclosed, which bothers me. The FairStock Score labels it 28/100 RISKY. I wouldn't call it a compounding machine. It might be a decent small business run reasonably well, but at this price, Mr. Market expects improvement I cannot confirm. If it were cheaper—say, closer to book value or with sales growth returning—it would be more interesting. For now, patience is better. In Buffett's words, it's far better to buy a wonderful company at a fair price, but this is a fair company at a rich price. I'd keep it on the watchlist, not in the portfolio.

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