Edelweiss.Fin. (EDELWEISS)

FairStock Score: 48/100 — MIXED

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

Key Financials

Strengths

• Sales growth of 132.10% and profit growth of 134.36% show strong momentum, with latest quarter net profit of ₹270 Cr on sales of ₹4,404 Cr.
• Piotroski F-Score of 7/9 indicates improving operational and financial health.
• ROCE of 13.27% suggests capital is being deployed reasonably efficiently despite the low ROE.
• PEG of 0.14 implies the current P/E of 18.29 may be reasonable if the high growth rate continues.

Concerns

• ROE of only 5.16% is weak; the company earns little on shareholder equity.
• Debt/Equity of 3.51 is high, making earnings and book value sensitive to credit cycles.
• P/B of 2.07 and P/E of 18.29 leave limited margin of safety for a holding company.
• Promoter holding of 32.69% is moderate, and dividend yield of 1.31% provides minimal downside cushion.

AI Analysis

At 120.38, Edelweiss is not the kind of stock I usually want to own. It's a holding company, so I must value what lies underneath, but the figures tell me the balance sheet is doing a lot of heavy lifting. Sales and profits jumped 132% and 134%, and the latest quarter shows ₹4,404 Cr in sales and ₹270 Cr in net profit. Those are headline numbers. But my mentor Benjamin Graham taught me to look through the headline to the equity: ROE is just 5.16%. That is far below what I expect from a quality business. A firm that earns five percent on equity and carries debt at 3.51 times equity is not a fortress. High leverage amplifies growth on the way up, but it can eat shareholders when credit turns. Book value is ₹58.04, and with the stock at ₹120.38, I pay over two times book. The P/E of 18.29 is not expensive if this growth is real, and the PEG of 0.14 is eye-catching; but growth rates of 134% rarely compound for long, especially for a holding company in financial services. The Piotroski score of 7/9 tells me recent fundamentals have improved, and ROCE of 13.27% suggests intermediate capital discipline, but I am cautious. Promoter holding at 32.69% is not a controlling vote of confidence in my book, and the dividend yield of 1.31% gives me little compensation while waiting. This may be a fast grower in the market's eyes, but I need margin of safety. Without a cleaner balance sheet and proof that ROE can rise above the cost of capital, I would rather wait on the sidelines. In investing, it's okay to pass on a seemingly cheap growth story if I don't understand the leverage.

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