Chemcrux Enterp. (540395)

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

Key Financials

Strengths

• Sales growth of 13.85% and profit growth of 19.70% show positive momentum.
• Piotroski F-Score of 7/9 indicates decent financial health and operational quality.
• Latest quarter was profitable with ₹22 crore sales and ₹2 crore net profit.
• Company pays a dividend yield of 1.02%, showing some return to shareholders.

Concerns

• P/E of 69.16 is extremely high relative to ROE of 5.34% and ROCE of 6.69%.
• PEG ratio of 4.12 suggests the growth rate is already more than fully priced in.
• Stock is at its 52-week high of ₹228.95 after starting the range at ₹64, leaving no margin of safety.
• Small absolute scale — ₹22 crore quarterly sales and ₹2 crore quarterly profit — makes a ₹339 crore valuation difficult to justify.

AI Analysis

When I look at Chemcrux, I first ask whether the business earns a high return on the capital invested. The numbers say no. The company sells at ₹228.95, giving a market cap of ₹339 crore, which is 69.16 times earnings and 4.29 times a book value of ₹53.34. For that price, I expect a wonderful business. But ROE is just 5.34% and ROCE 6.69%. That is not the hallmark of a wide-moat specialty chemical franchise; it looks more like a small enterprise growing into its costs. Sales are growing at 13.85% and profit at 19.70%, so it is moving in the right direction. The Piotroski F-Score of 7/9 also suggests the operational pulse is reasonably healthy. But the prudent investor must ask what growth is worth. The PEG ratio is 4.12, meaning the growth rate is already fully paid for, and then some. The latest quarter shows sales of ₹22 crore and net profit of ₹2 crore — small absolute numbers for a ₹339 crore market cap. If that profit run-rate were the whole year, the earnings yield would be thin, and at 69 times trailing earnings, I am not being paid to wait. The dividend yield, at 1.02%, provides little comfort. The stock has also moved from ₹64 to its 52-week high of ₹228.95. I do not pay up simply because a share price has risen. As Graham would say, price is what you pay, value is what you get. Here, I would be paying an exceptional multiple for a business earning modest returns on equity and capital. Unless profitability improves dramatically, the margin of safety is very thin. I would keep this on my watchlist, not my buy list.

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