Competent Auto (531041)

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

Key Financials

Strengths

• Trades at 0.93 times book value (₹599.05 book vs ₹556.95 price), offering a Graham-style margin of safety on stated assets.
• Low P/E of 10.18 gives an earnings yield of roughly 9.8%, attractive if current earnings are sustainable.
• Reported profit growth of 67.52% and a PEG of 0.26 show the market is not paying a premium for growth.
• Piotroski F-Score of 7/9 indicates decent recent financial health.
• Sales growth of 9.34% shows the business is still expanding on the top line.

Concerns

• ROE of just 5.42% and ROCE of 8.74% reflect poor returns on invested capital; the company is a low-return dealer, not a wealth compounder.
• Latest quarter net profit of ₹8 Cr on sales of ₹759 Cr means a very thin ~1% net margin — no pricing power.
• Dividend yield is only 0.26%, so returns depend almost entirely on capital gains.
• Stock is at its 52-week high (₹556.95) after a low of ₹320.05, while promoter holding and debt-equity data are unavailable — limiting governance and leverage assessment.

AI Analysis

Let me look at Competent Auto the way I look at any business: what it earns on capital, how durable that is, and what price I pay. It is an auto dealer, so I already know the economics are tough — high capital, low margins, no pricing power. The latest quarter proves it: ₹759 crore of sales generated only ₹8 crore of profit, about a 1% net margin. That is not a wonderful franchise; there is no castle-and-moat story here. But Graham taught me that an ordinary business at a good price can still be an investment. At ₹556.95, the stock trades below its book value of ₹599.05 — roughly 93 paise for every rupee of net assets. The P/E is 10.18, giving an earnings yield near 9.8%. Reported profit growth of 67.52% looks exciting, and the PEG of 0.26 makes it even more tempting, but I have to treat that number with suspicion. One year of 67% growth can come from a low base, a cyclical recovery, or cost cuts; it is not the same as durable compounding. The 5.42% ROE and 8.74% ROCE tell me this business does not earn attractive returns on the capital it employs. The Piotroski score of 7/9 is a good sign, but it only tells me the company has not recently stumbled, not that the future is bright. The stock is sitting at its 52-week high of ₹556.95, so the margin of safety has shrunk since the ₹320 low. With no promoter holding or debt-equity data, I cannot fully assess governance or leverage. This is a cyclical asset play, but only for a patient investor who understands the ups and downs of a dealer's profits.

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