Andhra Paper (ANDHRAPAP)

FairStock Score: 5/100 — RISKY

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

Key Financials

Strengths

• Price is 31% below book value (P/B 0.69 vs BV ₹97.96), offering some margin of safety if assets are worth book.
• Conservative balance sheet with debt/equity of only 0.14.
• High promoter holding of 72.45% aligns management with minority shareholders.
• Dividend yield of 1.45% provides modest income while waiting.
• Sales growth of 8.55% shows some top-line resilience.

Concerns

• ROE of 0.97% and ROCE of 4.50% are far below acceptable returns on capital.
• P/E of 72.93 with profit declining -15.45% and PEG of 8.53 makes earnings valuation very expensive.
• Piotroski F-Score of 4/9 and FairStock Score of 5/100 indicate weak financial health.
• Latest quarter net margin is only ~2.4% (₹10 Cr profit on ₹419 Cr sales).

AI Analysis

Let me be honest: Andhra Paper fails my first test — it is not a wonderful business. Return on equity is just 0.97% and return on capital employed is 4.50%; an Indian fixed deposit would earn more than this company does on its own equity. The P/E of 72.93 is unacceptable, especially when profit growth is -15.45%. Graham would remind me that price is what you pay, value is what you get, and paying 72 times earnings for a business whose profits are shrinking is not value investing. The one figure that stops me from dismissing it completely is the book value: ₹97.96 against a price of ₹67.58, or P/B of 0.69. So I am buying a rupee of stated book value at 69 paise. But a discount to book is only meaningful if the assets are honest and productive. The Piotroski F-Score of 4/9 suggests weak fundamentals, and the latest quarter’s net profit of ₹10 Cr on ₹419 Cr sales is a razor-thin 2.4% margin. Sales grew 8.55%, yet profits fell; that tells me the additional revenue is not converting into shareholder earnings. On the positive side, the balance sheet is conservative with debt/equity of 0.14, and promoters own 72.45%, so their interests are aligned. Dividend yield of 1.45% provides a small cushion. But this remains a commodity paper business with no evident moat. A low P/B can be a value trap if returns never improve. This is not a wonderful company at a fair price; it is a possible asset play at a discounted price. I would wait for evidence of better capital allocation before acting.

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