Paragon Finance (531255)

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

Key Financials

Strengths

• Price-to-book of 0.77 offers a 23% discount to book value of ₹81.09.
• P/E of 7.50 is low, so current earnings are available at a modest multiple.
• Piotroski F-Score of 7/9 points to satisfactory financial health.
• Latest quarter is profitable at ₹2 Cr net profit despite tiny scale.

Concerns

• Zero growth in sales and profit means no compounding engine.
• ROE of 9.09% and ROCE of 1.76% indicate weak deployment of capital; ROCE is especially poor.
• Net profit of ₹2 Cr on sales of ₹1 Cr suggests possible non-operating income; earnings quality needs scrutiny.
• No dividend yield, and debt/equity and promoter holding are N/A, leaving minority investors without adequate data.

AI Analysis

At ₹62.50, Paragon Finance trades below what Ben Graham would have looked for: price-to-book is 0.77 against ₹81.09 of book value. That makes it look like an asset play. But cheap is not enough. The NBFC earns a return on equity of only 9.09%, and return on capital employed is a weak 1.76%. For a financial firm, that tells me the balance sheet is not being deployed into high-yielding lending; it is closer to a low-yielding, perhaps largely idle, asset. Growth is zero: sales and profit growth are both 0.00%. The latest quarter reported ₹2 crore net profit against ₹1 crore sales, which is not the earnings pattern of a healthy operating lender; I would want to know if that is non-operating income or a write-back. The Piotroski F-score of 7/9 is a small plus, suggesting the company is not in financial distress, but debt/equity is not disclosed, a serious information gap for an NBFC. With no dividend and no promoter holding data, the minority shareholder is relying on an eventual re-rating or asset sale. At a market cap of just ₹28 crore, this is a microcap; I cannot expect a moat or scale. If this were part of a portfolio, I would only consider it as a speculative asset play, not a compounder. The valuation gives some downside cushion, but the business itself earns mediocre returns. I would demand proof that book value can grow, or that operating earnings will replace one-off profits. Until then, it is a cheap business, not necessarily a good business.

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