Deepak Chemtex (544036)

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

Key Financials

Strengths

• ROCE of 33.79% shows strong capital efficiency despite the downturn
• P/E of 9.78 provides a margin of safety if earnings stabilize
• Latest quarter net profit of ₹4 crore on ₹31 crore sales indicates margins still exist
• Trading at ₹90.80, well below the ₹150 high, near the lower end of its 52-week range

Concerns

• Sales down 20.41% and profit down 23.29% show serious earnings contraction
• Piotroski F-score of 3/9 suggests weak financial health and possible balance sheet stress
• No dividend yield means zero income support while waiting for recovery
• Critical data missing: book value, debt/equity, ROE, and promoter holding; cannot fully assess downside

AI Analysis

Let me start with what I like: Deepak Chemtex earns a 33.79% ROCE, which tells me the business is efficient at putting capital to work. At ₹90.80, that efficiency is available at a P/E of just 9.78 and a market cap of only ₹102 crore. The latest quarter still produced ₹4 crore net profit on ₹31 crore sales, roughly a 13% margin, so the engine isn't broken. But I cannot ignore the obvious smell of a downturn. Sales are down 20.41% and profits down 23.29%. A specialty chemical maker with this kind of revenue fall is either losing pricing power, seeing weak demand, or hitting a cyclical air pocket. The Piotroski F-score of 3/9 is a red flag; it suggests the company's financial health has deteriorated. I also see no dividend, so the patient shareholder is relying wholly on capital appreciation. Worse, I don't have book value, debt-to-equity, ROE, or promoter holding data. As Graham would say, I cannot fall in love with a number I cannot verify. The 52-week range of ₹69.20 to ₹150.00 shows how violently the market has repriced this stock. This looks like a cyclical at the unwelcome end of the cycle, not a compounder yet. The low P/E may be a value trap if earnings keep falling. I would not buy simply because it's cheap. I need evidence that demand is stabilizing and that the balance sheet is strong enough to weather the storm. Until I see that, I stay cautious.

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