Capital Small (CAPITALSFB)

FairStock Score: 51/100 — MIXED

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

Key Financials

Strengths

• Trades below book value: price ₹257.30 vs book value ₹277.88, with a low P/E of 8.78.
• Piotroski F-Score of 7/9 suggests reasonably sound financial health and earnings quality.
• Revenue growth of 15.73% shows the business is expanding; latest quarter sales were ₹272 Cr.
• Dividend yield of 1.53% provides a small return while waiting for earnings to catch up.

Concerns

• Profit growth of just 1.06% is far below sales growth of 15.73%, indicating poor conversion of revenue into earnings.
• ROE of 10.71% and ROCE of 7.04% are modest, not evidence of a high-return franchise.
• Promoter holding of only 17.96% weakens owner-operator alignment.
• Stated PEG of 0.73 conflicts with reported profit growth of 1.06%, so cheapness may be a value trap if earnings stagnate.

AI Analysis

At ₹257.30, I can buy one rupee of book value for 93 paise. That is the first thing that catches a Graham investor's eye. The P/E is 8.78, and the dividend yield is 1.53%. So the price is not demanding. But in banking, cheap can be a trap. Capital Small is a small finance bank, operating in a crowded, commodity-like market. Its moat is narrow. Promoter holding of 17.96% is not the owner-operator structure I prefer; it leaves me wondering who is truly in charge. The numbers are mixed. ROE of 10.71% is respectable but not special; ROCE of 7.04% tells me capital is not generating exceptional returns. Revenue grew 15.73%, yet profit rose only 1.06%. That gap alarms me. A bank that grows its top line 15% but cannot grow earnings is either competing on price, adding costs, or building provisions. I have no data to identify which, so I cannot claim it is a wonderful business. The Piotroski F-Score of 7/9 is a positive sign; the balance sheet appears solid. And with a book value of ₹277.88 against a price of ₹257.30, there is some margin of safety. The FairStock Score of 47/100, 'mixed', is honest. I also discount the PEG ratio of 0.73 because it is inconsistent with the reported 1.06% profit growth. A low PEG built on stale or future estimates is not something I trust. What do I own at ₹1,190 Cr? A small lender, trading below book, earning a moderate ROE, with stagnant profits. That is closer to a slow grower, or an asset play, than a compounding machine. I would watch the next few quarters for profit growth to catch up with loan growth, and for asset quality. If earnings begin to follow the 15.73% revenue growth, this could re-rate. Until then, it is 'interesting, but unproven.'

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