Arihant Capital (ARIHANTCAP)

FairStock Score: 41/100 — MIXED

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

Key Financials

Strengths

• Promoter holding of 67.67% aligns interests and reduces governance risk.
• Debt/equity of 0.51 is moderate, showing no excessive leverage.
• ROCE of 21.26% suggests efficient use of capital despite the earnings decline.
• Book value of ₹31.08 gives some tangible asset backing, though the stock trades at 2.28x book.

Concerns

• Sales growth of -5.29% and profit growth of -46.98% show deteriorating fundamentals.
• Piotroski F-Score of 3/9 indicates weak financial health and possible operational stress.
• P/E of 22.73 for a stockbroker with falling profits is not an attractive valuation.
• Latest quarter net profit of ₹5 Cr on sales of ₹49 Cr implies thin margins; dividend yield is just 0.62%.

AI Analysis

At ₹70.79, Arihant Capital is not a stock I can call a bargain. A broker's income depends on market activity, not on durable pricing power. The 5.29% decline in sales and 46.98% crash in profits tell me the business is getting less profitable even before I think about valuation. With a P/E of 22.73, I am paying 22 times earnings for a company whose profits are falling; a cyclical at the wrong point can look cheap on trailing earnings only to become more expensive as earnings fade. The P/B of 2.28 means the market demands a premium over book value of ₹31.08, but an 11.04% ROE does not justify a rich multiple. I note debt/equity of 0.51 is manageable, and promoter holding of 67.67% aligns owners with management. ROCE of 21.26% suggests decent capital allocation, but with profit growth down 46.98% and a Piotroski F-Score of 3 out of 9, financial health is weak. The latest quarter net profit of ₹5 Cr on sales of ₹49 Cr is thin; I cannot build a castle on such sand. The FairStock Score of 5/100 labels this risky, and I agree. There is no obvious economic moat in stockbroking—competitors can undercut on brokerage and technology. The 52-week range of ₹56.97 to ₹120.00 shows how volatile sentiment is; Mr. Market has already repriced the stock sharply. As Graham taught, price is what you pay, value is what you get. At 2.28 times book with declining earnings, I am not getting an adequate margin of safety. This is a cyclical business facing a down phase; I would wait on the sidelines until earnings stabilize and the score improves. Better to miss a trade than lose capital.

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