Arfin India (ARFIN)

FairStock Score: 22/100 — RISKY

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

Key Financials

Strengths

• Strong promoter holding of 69.77% aligns management interests with shareholders.
• Piotroski F-Score of 7/9 indicates improving financial health and operational efficiency.
• ROCE of 13.97% suggests reasonable capital productivity relative to debt burden.
• Profit growth of 59.08% shows recent earnings momentum from a low base.
• Sales growth of 8.89% reflects modest business expansion in a cyclical industry.

Concerns

• Extremely high valuation: P/E of 142.49 and P/B of 10.89 versus ROE of only 5.46%.
• Debt/Equity of 0.93 leaves little cushion if aluminium prices turn down.
• Latest quarter net profit of ₹5 Cr on sales of ₹196 Cr implies a razor-thin margin of ~2.5%.
• Dividend yield of 0.15% and PEG ratio of 4.19 offer no compensation for overvaluation and growth risk.

AI Analysis

Let me start with what I like. Arfin India has a promoter holding of nearly 70%, which tells me the people running the shop have skin in the game. The Piotroski score of 7/9 suggests the company's financial health has improved recently. But I must stop there, because everything else makes me uncomfortable. This is an aluminium business, a commodity player with no pricing power. In such a business, high returns on capital are rare, and Arfin's numbers confirm it. ROCE is 13.97%, which is acceptable, but ROE is just 5.46%. That means the company earns very little on the equity shareholders have in the business. The debt-to-equity ratio of 0.93 is also high for a cyclical company. If aluminium prices fall, this leverage will amplify the pain. Now look at the price. At ₹97.24, the market caps the company at ₹1,210 Cr, while the book value is only ₹8.93 per share. That's a price-to-book of 10.89. The P/E of 142.49 is not a sign of quality; it is a sign of excessive optimism. Yes, profit grew 59.08%, but sales grew only 8.89%. That means the profit jump is likely from a low base or one-off gains, not sustainable compounding. Even the PEG ratio of 4.19 tells me I'm paying far too much for growth. The dividend yield is 0.15%, so I'm not being paid to wait. In the latest quarter, net profit of ₹5 Cr on sales of ₹196 Cr is a margin of just about 2.5%. This is a risky, cyclical business at a very expensive price. As Graham said, price is what you pay, value is what you get. Here, the value does not justify the price. I'd rather pass and wait for a margin of safety.

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