Garnet Construct (526727)

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

Key Financials

Strengths

• P/B of 0.37: price ₹25.37 versus book value ₹68.27 offers a large margin of safety if book value is genuine
• P/E of 3.38 implies an earnings yield of roughly 29.6%
• ROE of 35.58% and Piotroski F-Score of 7/9 suggest recently efficient operations and solid financial-score fundamentals
• Sales growth of 1710% and profit growth of 1000% indicate a sharp business revival, albeit from a low base

Concerns

• ROCE of only 9.96% versus ROE of 35.58% suggests possible leverage, non-operating income, or weak underlying capital efficiency
• Latest quarter net margin of 62.5% on ₹16 crore sales is abnormally high and likely unsustainable for a construction business
• Data inconsistencies: price ₹25.37 is below the stated 52-week low of ₹37.75; promoter holding and debt/equity are undisclosed
• Microcap with ₹36 crore market cap, zero dividend, and insufficient disclosure raises liquidity and governance risks

AI Analysis

At ₹25.37, this is not a quality compounder—it is a possible bargain if the numbers are real. The market cap is only ₹36 crore, so I must be brutally honest: small construction companies rarely enjoy durable moats. Residential and commercial projects are intensely competitive and cyclical. Graham would ask: am I getting assets cheap? Yes, on the surface. Book value is ₹68.27, so P/B is just 0.37, and P/E is 3.38. That implies an earnings yield near 30%—far better than any bond. The latest quarter shows net profit of ₹10 crore on sales of ₹16 crore, but a 62.5% net margin is not normal for construction; I suspect one-off income, aggressive revenue recognition, or a low-base artifact. Sales growth of 1710% and profit growth of 1000% are off a tiny base and tell me the business had a sudden burst, not that it has become a franchise. ROE of 35.58% looks wonderful, but ROCE of only 9.96% makes me question leverage or non-operating profits. Debt/equity is not available, promoter holding is not available, and the current price sits below the stated 52-week low of ₹37.75. That is a red flag. I would treat this as an asset play, not a growth story. If book value is genuine—real land, completed inventory, reliable receivables—there may be value. If not, cheapness is a trap. Piotroski F-Score of 7/9 is encouraging, but a tiny, illiquid, no-dividend stock demands a wider margin of safety. I would not buy unless I could verify the assets and see evidence that the latest quarter's profit is repeatable.

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