Aarti Pharma (AARTIPHARM)

FairStock Score: 34/100 — RISKY

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

Key Financials

Strengths

• Debt-to-equity of 0.33 indicates a manageable balance sheet.
• Promoter holding of 43.10% aligns management with minority shareholders.
• ROCE of 17.44% is above ROE of 12.59%, suggesting reasonable capital efficiency.
• The latest quarter still reports a net profit of ₹48 Cr, so the business is not loss-making.

Concerns

• Sales growth is deeply negative at -19.62%, and profit growth is even worse at -32.30%.
• Piotroski F-Score of 3/9 points to deteriorating financial health and operating efficiency.
• Valuation remains expensive despite weakness: P/E of 30.39 and P/B of 3.66 on declining earnings.
• FairStock Score of 8/100 labels the stock risky, with no margin of safety visible.

AI Analysis

Looking at Aarti Pharma, I am reminded of Graham's warning: price is what you pay, value is what you get. At ₹688.15, the market capitalizes this company at ₹6,560 Cr. But what is the business earning? Sales have fallen by 19.62% and profits by 32.30%. That is not a franchise growing in value; it is a business losing momentum. The latest quarter, with sales of ₹432 Cr and net profit of ₹48 Cr, does not suggest a rebound. ROE is 12.59% and ROCE is 17.44%—acceptable, but not stellar enough to compensate for shrinkage. Book value is ₹187.86, yet I am asked to pay 3.66 times book and 30.39 times trailing earnings. For a company whose profits are falling, that is a rich price with no margin of safety. The Piotroski F-Score of 3 out of 9 is a red flag; it tells me the financial health is deteriorating. On the positive side, debt-to-equity is 0.33, so the balance sheet is not stretched. Promoter holding at 43.10% shows skin in the game. Dividend yield of 0.69% is trivial. In Buffett's terms, I would rather buy a wonderful business at a fair price, but this is a challenged business at an expensive price. The 52-week range of ₹585 to ₹946 shows the market has already marked it down, but a falling price is not automatically cheap. FairStock Score of 8/100 reinforces my caution. This may become a turnaround if operations stabilize, but the burden of proof is on management. I need evidence of sales stabilizing, margins improving, and F-score recovering before I would consider investing. Until then, I watch from the sidelines.

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