CARE Ratings (CARERATING)

FairStock Score: 37/100 — MIXED

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

Key Financials

Strengths

• High profitability with ROE 20.67% and ROCE 24.55%
• Very low leverage with debt-to-equity of 0.03
• Profit growth of 29.14% outpacing sales growth of 16.33%, indicating operating leverage
• Piotroski F-score of 7/9 suggests sound financial health
• Latest quarter net profit of ₹37 Cr on sales of ₹112 Cr demonstrates strong margins

Concerns

• Valuation is rich: P/E 30.10, P/B 5.92, and PEG 1.32 leaves limited margin of safety
• Promoter holding is 0.00%, raising governance and owner-alignment concerns
• Dividend yield is modest at 1.12% for patient shareholders
• FairStock Score of 38/100 indicates a mixed picture overall

AI Analysis

At ₹1,595.30, CARE Ratings has a market capitalisation of ₹4,844 Cr. I look first at the economics of the business, not the share price. A ratings agency is an asset-light trust business, and the figures reflect that. Return on equity is 20.67%, ROCE is 24.55%, and debt-to-equity is just 0.03. These are excellent numbers. Profit growth of 29.14% has outpaced sales growth of 16.33%, showing margin expansion. The latest quarter’s net profit of ₹37 Cr on sales of ₹112 Cr confirms a wide revenue-profit gap, typical of a franchise with pricing power. The Piotroski F-score of 7/9 is reassuring; it suggests the financial health is sound and earnings are not built on aggressive accounting. But I must also be disciplined about price. At ₹1,595.30, the stock trades at 30.10 times earnings and 5.92 times book value. Book value is ₹269.34. That is a demanding valuation. A PEG of 1.32 tells me the market has already given credit for much of the current growth. If growth slows, the multiple could compress. What bothers me most is promoter holding at 0.00%. In Indian companies, I want owners with real skin in the game. Here, there is no promoter to protect minority shareholders; shareholders must rely entirely on the board and management quality. The dividend yield is only 1.12%, offering little compensation while waiting. FairStock Score of 38/100 also reminds me this is a mixed situation. I admire the business, but I would wait for a better margin of safety before investing fresh capital.

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