N S D L (544467)

FairStock Score: 8/100 — RISKY

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

Key Financials

Strengths

• Latest quarter net margin is high: ₹90 Cr net profit on ₹360 Cr sales, roughly 25%.
• ROCE of 23.57% shows capital-efficient operations and a strong franchise.
• Profit growth of 4.44% is positive despite a slight sales decline, showing cost discipline.
• Piotroski F-Score of 6/9 indicates generally acceptable financial health.

Concerns

• P/E of 49.17 is very expensive for a business with only 4.44% profit growth.
• PEG ratio of 11.07 suggests the valuation is far ahead of underlying growth.
• Sales growth is negative at -0.81%, indicating stagnation in the top line.
• Dividend yield of 0.22% is negligible, offering little income support to shareholders.

AI Analysis

When I look at NSDL, I see a high-quality toll booth disguised as a depository. The latest quarter shows ₹360 Cr revenue and ₹90 Cr net profit—a 25% net margin, which tells me this is an asset-light, infrastructure-like franchise. ROCE of 23.57% confirms management is earning excellent returns on capital. That is the kind of business quality I admire. But as Graham taught me, a wonderful business can still be a poor investment if you pay the wrong price. Sales have actually fallen 0.81%, and profit growth is only 4.44%. That is not growth; that is a slow-moving utility. With a P/E of 49.17, you are paying a price usually reserved for a fast-growing compounder for a business whose growth is closer to inflation. The PEG ratio of 11.07 screams overvaluation—the growth simply does not justify the multiple. The dividend yield is a paltry 0.22%, so you are not being paid to wait. The Piotroski F-Score of 6/9 is decent, but the FairStock Score of 10/100 flags this as risky. In Graham's terms, paying 49 times earnings for 4% growth is a trap. Even a wonderful business can be a poor investment at an excessive price. I would want a much lower price or significantly accelerated growth before considering this. As it stands, this is a high-quality company at a dangerous valuation.

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