Allied Blenders (ABDL)

FairStock Score: 27/100 — RISKY

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

Key Financials

Strengths

• ROE of 20.36% and ROCE of 21.08% show efficient capital deployment and solid underlying profitability.
• Promoter holding of 80.91% aligns management interests with minority shareholders.
• Piotroski F-Score of 7/9 indicates decent overall financial health and improving fundamentals.
• Profit growth of 19.51% despite weak sales growth of 2.98% suggests operating leverage or margin expansion.
• Five-year revenue CAGR of 8.43% reflects moderate, consistent business growth.

Concerns

• Free cash flow is deeply negative at ₹-860 Cr, questioning the quality of reported earnings.
• P/E of 49.66 and P/B of 10.97 leave no margin of safety; PEG of 4.42 shows expensive growth.
• Sales growth of only 2.98% with a dividend yield of 0.76% means returns depend almost entirely on price re-rating.
• Debt/equity of 0.68 combined with negative free cash flow could strain the balance sheet if cash generation does not improve.

AI Analysis

This business earns an admirable 20.36% return on equity and 21.08% return on capital employed, and a Piotroski score of 7/9 tells me the recent accounts are not deteriorating. But investing is about price versus value, and the price here is demanding: at ₹561.05, the market capitalises the company at ₹13,317 Cr, or 49.66 times earnings and 10.97 times book value. A PEG of 4.42 makes the point bluntly—the 19.51% profit growth is not cheap when revenue is growing only 2.98%. I would rather have a business that converts earnings into cash; here free cash flow is minus ₹860 Cr. No matter how fine the brands, a business that consumes cash while claiming profits makes me suspicious. With debt at 0.68 times equity, the balance sheet is not terrible, but negative cash flow means future investment may have to be borrowed. The 5-year revenue CAGR of 8.43% shows this is a moderate grower, not a fast one. Book value of ₹51.13 against a ₹561.05 price leaves virtually no margin of safety; the downside is the buyer's risk. Promoter holding of 80.91% is good alignment, and the 0.76% dividend yield is meagre comfort. In Graham's language, a good business at a high price is not a good investment. The FairStock Score of 27/100 matches my own caution. If the company can turn free cash flow positive, accelerate sales, and let earnings catch up with the multiple, I would revisit. Today, I would rather wait—as Buffett says, it takes no activity to sit and watch. Patience is the intelligent investor's best friend.

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