Salem Erode Inv. (540181)

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

Key Financials

Strengths

• Piotroski F-score of 6/9 suggests some recent improvement in financial health
• Reported profit growth of 7.35% indicates a possible stabilization from a low base
• Trading near 52-week high shows market optimism about the business
• Small sales base gives theoretical room for high percentage growth if turnaround succeeds

Concerns

• Negative ROE of -21.21% and ROCE of -6.67% show ongoing value destruction
• P/B of 2.52 is expensive for a company with negative earnings and latest quarterly loss of ₹1 crore on ₹1 crore sales
• P/E of 0.00 is meaningless due to the lack of positive earnings
• No dividend and insufficient data on promoter holding and debt/equity reduce transparency

AI Analysis

At ₹49.40, Salem Erode Inv. is a ₹57 crore micro-cap NBFC trading at 2.52 times book value of ₹19.63. That alone would make Graham uncomfortable, but when the business is losing money, the arithmetic gets worse. Return on equity is -21.21% and ROCE is -6.67%; the latest quarter shows ₹1 crore of sales against a ₹1 crore net loss. A P/E of 0.00 is meaningless here because earnings are negative. As Buffett would say, price is what you pay, value is what you get. With negative returns on capital, this company is destroying value, not compounding it. Sales growth of 1.23% is nearly stagnant, and the 7.35% profit growth is on a deeply depressed base—not evidence of a durable turnaround. The Piotroski F-score of 6/9 offers a faint signal of improving financial health, but in a small NBFC I need far more proof. No dividend and undisclosed promoter holding and debt-equity data leave me in the dark. I cannot call this a wonderful business at a fair price; it is a weak business at an expensive price. The market has pushed the stock to its 52-week high, but hope is not an investment strategy. I would need several quarters of positive net profit, improving ROE, and clear balance-sheet transparency before I even begin to consider this as a candidate. For now, the margin of safety is absent.

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