Modern Engineer. (539762)

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

Key Financials

Strengths

• P/E of 2.92 is optically very cheap, with earnings yield above 34%
• ROE of 34.80% and ROCE of 20.54% show strong current capital efficiency
• Piotroski F-score of 7/9 indicates solid near-term financial health
• Profit growth of 193.35% and stock trading near 52-week high show momentum

Concerns

• P/B of 5.21 against book value of ₹32.68 means price is far above tangible asset backing
• Profit growth of 193.35% dwarfs sales growth of 9.35%, raising questions about earnings quality and sustainability
• No dividend paid, so shareholder returns depend fully on uncertain future growth
• Lack of promoter holding and debt/equity data limits assessment of governance and leverage

AI Analysis

At first glance, a P/E of 2.92 with 193% profit growth looks like a bargain, but Ben Graham would caution me to ask whether the earnings are real and sustainable. Modern Engineer is a civil construction company with modest top-line growth of only 9.35%; the profit leap is far above sales growth, so I must suspect a low base or non-operating items. With book value at ₹32.68 and price ₹170.35, I am paying 5.21 times book—not cheap for a cyclical, asset-heavy contractor. The 34.80% ROE and 20.54% ROCE are impressive, but construction returns can be volatile and capital-hungry. The Piotroski F-score of 7/9 suggests decent financial health, but I have no debt/equity data and no promoter holding info; without these, I cannot judge skin in the game or leverage risk. The stock has run from ₹27.72 to ₹170.35 in 52 weeks—the market has already discovered this. At ₹25 Cr quarterly sales and ₹3 Cr net profit, the company is small; one bad project can destroy the year's earnings. Dividend yield is zero, so my return depends entirely on price appreciation and growth expectations. This looks like a cyclical turning hot, not a durable compounding machine. If the construction cycle turns or margins normalise, today's low P/E could quickly become a high P/E. I would need a wider margin of safety, better disclosure, and evidence that cash flows support reported earnings before considering this. At this price, I would rather watch patiently.

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