Alembic (ALEMBICLTD)

FairStock Score: 54/100 — MIXED

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

Key Financials

Strengths

• Zero-debt balance sheet with D/E of 0.00
• High promoter holding of 70.88% aligns management with shareholders
• Sales growth of 28.35% indicates business expansion
• Dividend yield of 2.62% provides some income support
• Trailing P/E of 7.39 appears optically cheap

Concerns

• ROCE of only 6.90% shows poor capital efficiency
• Piotroski F-score of 4/9 signals weak financial health despite zero debt
• Profit growth is negative at -8.04% while sales grew 28.35%
• Latest quarter net profit of ₹60 Cr is nearly equal to sales of ₹74 Cr, suggesting reliance on non-operating income

AI Analysis

When I look at Alembic, I am drawn to its zero-debt balance sheet and 70.88% promoter holding—that shows skin in the game. A trailing P/E of 7.39 with a 2.62% dividend yield is initially attractive. But Graham taught me to value quality, not just cheapness. Return on capital employed is only 6.90%, which is weak for a business that needs to deploy capital into residential and commercial projects. The latest quarter’s net profit of ₹60 Cr against sales of ₹74 Cr raises a red flag: operating earnings appear to be propped up by non-operating items. The Piotroski score of 4/9 reinforces that the financial health is not as clean as the zero debt suggests. Profit growth is down 8.04% even though sales grew 28.35%, a divergence I dislike because it suggests the growth is not translating into dependable earnings. The balance sheet is strong, and an ROE of 16.24% is respectable, but with book value of only ₹33.79 and a price of ₹93.41, I am paying 2.76 times book for a cyclically uncertain revenue stream. Real estate is a cyclical business, and Alembic's fortunes are tied to project execution, approvals, and the broader property cycle. The PEG ratio of 0.26 looks seductive, but with falling profits, I cannot rely on it. In Buffett's language, this is a cigar butt with a decent puff—not a wonderful business at a fair price. I would wait for stronger operating margins, consistent profit conversion, and evidence that the sales growth is generating higher ROCE before treating this as a value gem.

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