Bharat Wire (BHARATWIRE)

FairStock Score: 27/100 — RISKY

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

Key Financials

Strengths

• Low leverage: Debt/Equity of 0.13 provides a solid balance-sheet cushion for a cyclical business.
• Profit grew 22.65% despite a sales decline, and the latest quarter shows ₹18 Cr net profit on ₹143 Cr sales, implying a strong ~12.6% net margin.
• ROCE of 13.38% is reasonable and above typical borrowing costs, indicating decent capital efficiency.
• Piotroski F-Score of 6/9 signals broadly acceptable fundamental health for a commodity player.
• Promoter holding of 41.27% gives some alignment with minority shareholders.

Concerns

• Sales fell 11.74%, pointing to weak demand or pricing power in the steel cycle, which makes profit growth less reliable.
• At P/E of 15.95 and P/B of 2.17, the valuation is not cheap for a cyclical commodity business.
• Zero dividend yield means investors get no income downside support while waiting for capital gains.
• FairStock Score of 43/100 is mixed, and high reported margins amid falling revenue warrant caution about earnings quality.

AI Analysis

Bharat Wire is not the kind of business I would put in the 'wonderful company' basket. It is an iron and steel producer, a cyclical commodity business where price-taker realities dominate and there is little durable moat. Sales fell 11.74%, yet profit rose 22.65%. As Graham would say, be skeptical of earnings that climb while revenue shrinks; I need to see whether this is genuine margin improvement or a one-off tailwind. The latest quarter helps a bit: sales ₹143 Cr and net profit ₹18 Cr imply a 12.6% net margin, which is strong for steel, but cyclical peaks can flatter. Financially, the company is conservative: debt/equity is only 0.13, so it will not sink under leverage. Return on equity is 10.94%, and ROCE is 13.38%—respectable but not outstanding. At ₹223.60, it trades at 15.95 times earnings and 2.17 times book value. For a cyclical, I prefer lower multiples and stronger balance-sheet cushioning, because today's profit may not be tomorrow's. The 22.65% profit growth makes the PEG look attractive at 0.70, but my experience says that when revenue falls 11.74%, extrapolating profit growth is dangerous. There is no dividend yield, so the small shareholder waits for price appreciation alone. Promoter holding at 41.27% is decent but not overwhelming. The Piotroski score of 6/9 suggests basic health, yet the FairStock score of 43/100 calls it mixed. I would wait for better evidence that steel demand has inflected and that margins are sustainable at lower volumes. This is a cyclical, not a predictable compounder.

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