Megri Soft (539012)

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

Key Financials

Strengths

• Book value per share is ₹67.48, giving a tangible asset base relative to the ₹122.90 price.
• The company is marginally profitable on a trailing basis, with a stated P/E of 56.65.
• Market cap is tiny at ₹41 Cr, leaving room for niche growth if operations improve.
• Price-to-book at 1.82 is not extreme compared to many overvalued small caps.

Concerns

• Sales declined -8.82% and profits fell -25%, with latest quarter net profit of ₹0 Cr.
• ROE of 2.20% and ROCE of 3.40% indicate very poor returns on shareholder capital.
• P/E of 56.65 is rich for a shrinking earnings base, offering no margin of safety.
• Piotroski F-Score of 3/9 suggests weak overall financial health.

AI Analysis

Let me think about Megri Soft the way I would any business. I first ask: what is the company earning, and is that earning power stable and growing? Here, the numbers fail that test. Sales are shrinking at -8.82%, profits are down -25%, and the latest quarter shows sales of just ₹1 Cr and net profit of ₹0 Cr. That is not a business compounding wealth. The stock trades at ₹122.90, giving a market cap of ₹41 Cr and a P/E of 56.65. For a company whose profits are falling, paying 56 times earnings is not valuation; it is optimism. Graham taught me to demand a margin of safety. Here the market cap is ₹41 Cr while the annual earnings needed to justify that P/E are roughly only ₹0.72 Cr. That leaves almost no room for disappointment. Book value is ₹67.48 per share, so at 1.82 times book, I am paying a premium for a business earning just 2.20% on equity and 3.40% on capital. I could earn more in a fixed deposit with less risk. No dividend means I don't even get paid to wait. The Piotroski score of 3 out of 9 reinforces my caution; this is a weak financial score. There is no promoter holding data, and I cannot evaluate management's intentions. In a small company, that is important. The shares sit at the upper end of their 52-week range, but this looks like price momentum, not intrinsic value. For a value investor, Megri Soft is too small, too weak, and too expensive. I would need to see sustained improvement in sales and profits, better capital returns, and a lower price before I would consider it. Until then, I respectfully pass.

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