Sunshield Chem. (530845)

FairStock Score: 42/100 — MIXED

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

Key Financials

Strengths

• High ROE of 27.93% highlights strong historical return on equity.
• Piotroski F-Score of 7/9 suggests the balance sheet and earnings quality remain broadly sound.
• Sales growth of 12.23% shows moderate momentum in the underlying business.
• Latest quarter is profitable: ₹95 Cr sales and ₹5 Cr net profit, so operations are not loss-making.

Concerns

• P/E of 30.21 and P/B of 9.30 leave very little margin of safety.
• ROCE of 14.93% versus ROE of 27.93% suggests leverage may be inflating equity returns.
• Profit growth of 200% against sales growth of 12.23% looks like a low-base effect, not durable compounding; latest net margin is only about 5.3%.
• Dividend yield of 0.29% and undisclosed promoter holding weaken downside protection.

AI Analysis

At first glance, Sunshield Chem looks like an exciting specialty chemical compounder: ROE of 27.93%, sales growth of 12.23%, and reported profit growth of 200%. But I have learned to be wary when profits gallop far ahead of the underlying business. With latest quarter sales of ₹95 Cr and net profit of ₹5 Cr, the margin is barely 5.3%; that doesn't indicate a powerful franchise. The 200% profit growth is more likely a small-base recovery than durable compounding. Being asked to pay a P/E of 30.21 and P/B of 9.30 for that is not my idea of a bargain. Book value is ₹105.19, so the market is pricing in years of near-perfect execution. ROCE of only 14.93% against ROE of 27.93% also suggests leverage is helping make equity returns look better; I never like to rely on debt to manufacture returns. The Piotroski score of 7/9 indicates the financial position hasn't deteriorated, but that's a check, not a valuation. The PEG ratio of 0.28 is misleading because it uses the anomalous 200% spike; when normalized, the multiple is not low. Dividend yield of 0.29% means the shareholder is dependent on capital gains, and with promoter holding not disclosed, I cannot properly assess commitment. In Graham's words, price is what you pay, value is what you get. At ₹978.60, I see no margin of safety. I will let this one pass and keep looking for simple, deleveraged businesses with honest growth and a reasonable price.

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