Atul (ATUL)

FairStock Score: 69/100 — STEADY

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

Key Financials

Strengths

• Near-zero debt (D/E 0.03) with Altman Z-score of 3.80 and Piotroski F-score of 8/9, indicating a financially sound, stable balance sheet.
• Strong promoter holding of 45.22%, aligning management with minority shareholders over the long term.
• Recent earnings momentum: latest quarter sales of ₹1,574 Cr and net profit of ₹164 Cr, supporting reported profit growth of 42.90%.
• Steady, established operations with fair returns—ROE 10.61%, ROCE 12.81%—and sales growth of 13.31% in latest period.

Concerns

• Valuation is expensive: P/E 33.07, P/B 3.54, and EV/EBITDA 25.71 versus a Graham Number of ₹2,937.58, DCF value of ₹1,979.98, and deeply negative margin of safety.
• Free cash flow of ₹109 Cr is very thin relative to the ₹19,649 Cr market cap, suggesting reported profits are not converting well into cash.
• Long-term growth is modest with 5-year revenue CAGR of only 8.39%; ROE of 10.61% is decent but not exceptional, so 42.90% profit growth may not be sustainable.
• Dividend yield of 0.37% offers little compensation while waiting for the market to recognise value.

AI Analysis

Atul is a respected specialty chemicals house, and the numbers show why. It carries almost no debt—debt to equity 0.03—and a Piotroski score of 8/9 tells me the recent profit improvement is backed by genuine operational discipline. The Altman Z-score of 3.80 also signals a safe balance sheet. Promoters own 45.22%, so my interests are aligned with people who have survived multiple downturns. That is a good starting point. But I buy a business, not a ticker, and price determines my return. At ₹6,723, I am paying 33 times earnings, 25.7 times EV/Ebitda, and more than 3.5 times book. Graham’s number—a conservative estimate of fair value—is only ₹2,938, and a discounted cash flow suggests about ₹1,980. The margin of safety is deeply negative. The company may be steady, but the price is not conservative. What about growth? Latest quarter sales of ₹1,574 Cr and profit of ₹164 Cr show momentum, and reported profit growth of 42.9% is eye-catching. But over five years, revenue compounded at only 8.39%. This is an established compounder, not a young high-grower. Return on equity of 10.61% is decent, not exceptional. Free cash flow of ₹109 Cr is thin against the ₹19,649 Cr market cap; reported earnings are not fully converting into cash, and that always worries me. Atul is a good business, but at this price it leaves little room for error. My discipline says: watch it, wait for a more sensible price, and never overpay for quality.

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