Arex Industries (526851)

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

Key Financials

Strengths

• Sales declined only 1.59%, showing a relatively stable revenue base despite the profit collapse.
• ROCE of 11.76% is meaningfully higher than ROE, suggesting operating assets still generate some return before leverage.
• Book value of ₹71.08 provides a reference point; the P/B of 2.01 is not a massive premium for a going concern.
• Small market cap of ₹57 crore means a niche, specialised textile product could have room to grow if managed well.

Concerns

• Profit growth is down 73.47% and the latest quarter net profit is ₹0 crore, so current earnings power is negligible.
• Piotroski F-Score of 3/9 indicates weak fundamental health across profitability, leverage and efficiency.
• P/E of 23.99 on collapsing earnings with zero dividend offers no valuation cushion.
• ROE of 7.22% is below what an owner should accept, and sales growth is negative; D/E and promoter holding are also not disclosed.

AI Analysis

When I look at Arex Industries, I see a small textile player in a tough phase. The market cap of just ₹57 crore and a P/E of 23.99 look modest at first glance, but this P/E is not a sign of quality; it is an optical illusion created by a 73.47% collapse in profit. Sales growth of -1.59% tells me demand is flat, and the latest quarter's net profit of ₹0 crore confirms the pressure on margins. The Piotroski F-Score of 3/9 is a serious red flag; it points to weak financial health and deteriorating fundamentals. ROE of only 7.22% is well below what I would demand from a business with a moat, and ROCE of 11.76% is merely passable. With zero dividend, the shareholder is relying entirely on price appreciation in a commodity-like textile sector where pricing power is limited. Book value is ₹71.08, so paying ₹143.20 means paying more than two times book for mediocre returns. In Graham's language, there is no margin of safety here. I would need evidence of a durable turnaround: improving quarterly profits, a better F-Score, and management investing capital above its cost. Until then, this is a cyclical business in a down cycle. The 52-week range of ₹95.50 to ₹165.70 shows volatility, but volatility alone is not opportunity. I prefer simple businesses with strong economics and a clear edge. Arex does not yet meet that test. Sometimes the best action is to sit on the sidelines and wait.

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