RRIL (531307)

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

Key Financials

Strengths

• Latest quarter is profitable: sales ₹33 Cr and net profit ₹2 Cr.
• Sales growth of 3.96% is positive, though modest.
• ROCE of 8.61% is higher than ROE, indicating some operating asset efficiency.
• Book value of ₹6.71 per share provides a floor of asset backing.
• Trading near the top of its 52-week range suggests some market interest.

Concerns

• ROE of 1.63% is extremely low, yet P/B is 3.26; shareholders get poor returns on book value.
• Profit growth fell 21.97% while P/E stands at 27.44, showing deteriorating earnings at an expensive multiple.
• Piotroski F-Score of 4/9 indicates weak financial health and operational fundamentals.
• No dividend yields 0.00%, so investors receive no income while waiting for uncertain growth.

AI Analysis

Let me start with the most important lesson: it is never a good idea to pay a high price for a mediocre business. RRIL earns only about ₹1.63 per ₹100 of shareholders' equity, an ROE of 1.63%. Compare that with the price-to-book of 3.26. I am being asked to pay more than three times book for a business that uses that book to generate almost no return. Graham would call this speculation, not investment. Sales have grown by only 3.96%, and profit growth is down 21.97%. In the latest quarter, sales were ₹33 Cr and net profit just ₹2 Cr. At a market cap of ₹265 Cr, the stock trades at 27.44 times earnings. That multiple is reserved for businesses with durable moats and visible growth; I do not see either here. Textile products are largely commoditised, and the data contains no evidence of pricing power or a strong brand. The ROCE of 8.61% is better than the ROE, but still far below what I would call a wonderful franchise. The Piotroski score of 4 out of 9 reinforces my caution; the financial health is weak. There is no dividend to compensate me while waiting. PEG ratio of 6.93 tells me growth is expensive relative to the price. In Buffett's terms, this looks like a cigar butt at a premium price. If I buy today, I need profit to climb steeply for many years just to justify the valuation. The numbers do not support that. A true margin of safety would come from a lower price, a much stronger balance sheet, and evidence of improving returns on capital. From the figures alone, this is a slow grower at best, and I would keep it on the watchlist rather than in my portfolio.

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