Ambika Cotton (AMBIKCO)

FairStock Score: 57/100 — STEADY

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

Key Financials

Strengths

• P/B of 0.92 means the market price is below book value of ₹1,599.09, offering a Graham-style asset margin of safety.
• P/E of 12.31 and PEG of 1.39 are reasonable; the market is not asking for a high growth premium.
• Piotroski F-Score of 7/9 suggests sound balance-sheet health and decent earnings quality.
• Promoter holding of 50.35% aligns interests, and a 2.74% dividend yield provides income while waiting.
• ROCE of 11.47% is above the ROE of 7.03%, indicating the operating business generates a reasonable return.

Concerns

• ROE of only 7.03% signals mediocre returns on equity and likely capital intensity.
• Profit growth of 6.23% lags sales growth of 11.46%, pointing to margin compression or rising costs.
• Textile is cyclical and competitive, and the numbers do not reveal a clear moat or pricing power.
• Latest quarter profit of ₹15 Cr on sales of ₹174 Cr implies a thin net margin, leaving little room for cost shocks.

AI Analysis

Let's look at Ambika Cotton as a business, not a ticker. At ₹1,467.55, I am being offered an asset with book value of ₹1,599.09—below book, without paying a premium. The P/E of 12.31 is not demanding, and the 2.74% dividend gives me something while I wait. But the first thing I check is return on equity: at 7.03%, this is not a wonderful business. It earns a moderate return on the capital it employs; ROCE of 11.47% tells me operating performance is better than the equity return, but it still lacks pricing power or a clear moat. The textile industry is a cost game, cyclical and global. Sales grew 11.46%, yet profit only 6.23%. Margin pressure shows in that gap. If the owner cannot convert sales growth into earnings growth, I should not pay up for growth. The PEG of 1.39 is acceptable only if the 6% profit growth is durable. Piotroski score 7/9 is a plus; it tells me the balance sheet is not deteriorating and earnings quality is reasonable. Promoters hold 50.35%, so their interests are aligned with mine. But at this stage, this is not a compounding machine. It is a modestly growing, asset-backed textile business available at a fair to slightly cheap price. I would not classify it as a fast grower. It is more like a slow grower with asset support. I need a margin of safety, and this has a small one. But I would not rush; I want to see cotton costs stabilise and margins recover before committing a large part of my portfolio.

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