Surat Trade (530185)

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

Key Financials

Strengths

• Price-to-book of 0.90 provides a margin of safety, with price ₹8.97 below book value ₹9.96.
• Latest quarter remains profitable: ₹3 Cr net profit on ₹11 Cr sales, so the business is not burning cash.
• Market cap of ₹203 Cr keeps it a small-cap, under-researched name where inefficiencies may exist.
• Stock is at the top of its 52-week range, suggesting some market re-rating from the ₹3.16 low.

Concerns

• Sales down 20.06% and profit down 58.24% indicate a deteriorating operating trajectory.
• ROCE is negative at -1.11%, while ROE is only 3.45% — capital is not being deployed effectively.
• Piotroski F-score of 2/9 signals weak financial health and a higher chance of continued stress.
• Zero dividend yield means no income support while waiting for a turnaround.

AI Analysis

At ₹8.97, Surat Trade sells at 0.9 times book value, with book value at ₹9.96. That initially catches my eye, as Graham taught us to seek margin of safety. But book value only matters if the asset base earns a decent return. Here the return on equity is just 3.45%, and ROCE is negative at -1.11%. This is not a compounding machine; it is a business in need of repair. Sales fell 20.06% and profits tumbled 58.24% from last year. The latest quarter shows ₹11 Cr sales and ₹3 Cr net profit, but one quarter does not change the damaged trajectory. Piotroski F-score of 2/9 is a red flag: weak profitability, deteriorating efficiency, and questionable financial health. I would not rely on this as a quality compounder. Also, there is no dividend yield, so the shareholder is dependent on price appreciation or a genuine turnaround. With price at the top of the 52-week range (₹3.16 to ₹8.97), the market has already re-rated this stock. The only attraction is the asset angle: P/B below 1 and market cap of ₹203 Cr against book value of roughly ₹225 Cr. But a discount to book can remain, or widen, if the business keeps shrinking. As Buffett says, it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Surat Trade is not wonderful; it is a possible cigar butt. I need proof of stabilised sales, improved capital deployment, and a return of positive ROCE before committing capital. Until then, this remains watchlist material, not a buy.

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