Smruthi Organic (540686)

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

Key Financials

Strengths

• Reported net profit grew 19.59% even as sales declined, showing some cost or margin control
• Piotroski F-score of 6/9 suggests reasonably sound financial health
• Company remains profitable at the latest quarter level with ₹1 Cr net profit on ₹22 Cr sales
• Book value of ₹53.87 provides some tangible asset backing
• Modest dividend yield of 1.34% indicates at least some shareholder return

Concerns

• Sales growth is sharply negative at -28.67%, indicating a weakening business top line
• ROE of 6.77% and ROCE of 7.98% are below the returns expected from a quality pharma franchise
• Valuation looks rich: P/E of 25.86 and P/B of 2.92 leave little margin of safety
• Key transparency gaps exist — debt-to-equity and promoter holding are not available

AI Analysis

At first glance, Smruthi Organic is a small pharmaceutical name with a market cap of ₹180 Cr and a price of ₹157.55. But the numbers don't pass my filters. The trailing P/E of 25.86 is not cheap, and the P/B of 2.92 means I am paying almost three times book value for a business that earns only 6.77% on equity and 7.98% on capital. That is a poor return; I could expect better elsewhere. The most alarming line is sales growth: -28.67%. The top line has collapsed, even though reported profit grew 19.59%. In Graham's language, I don't trust the numerator if the denominator is shrinking. Latest quarter sales of ₹22 Cr produced only ₹1 Cr net profit — roughly a 4.5% margin. That is thin and fragile. The Piotroski F-score of 6/9 is acceptable but not the sign of a special bargain. The dividend yield of 1.34% gives me little comfort. The debt-to-equity and promoter holding are not provided, which leaves too many questions for a prudent investor. Is the company using leverage? Who controls it? In a small pharma firm, these are not optional details. While the profit growth and near 52-week-high price may excite traders, I see a turnaround situation, not a wonderful business. A wonderful business compounds capital at high rates with pricing power; this one is shrinking sales with subpar returns. At ₹157.55, the market is already offering a premium for an uncertain recovery. I would wait for evidence of stable sales, higher ROE, and better disclosure before thinking about a margin of safety.

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