Eimco Elecon(I) (EIMCOELECO)

FairStock Score: 42/100 — MIXED

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

Key Financials

Strengths

• Sales grew 37.57% and profit grew 102.26%, reflecting strong demand and operating leverage
• Debt/equity of 0.01 gives a very strong, conservative balance sheet
• Promoter holding of 48.96% aligns management with minority shareholders
• Piotroski F-Score of 7/9 points to sound fundamentals
• ROCE of 15.95% and PEG of 0.28 make the valuation reasonable if growth continues

Concerns

• Negative free cash flow in the latest period raises questions about earnings quality
• ROE of 11.49% is moderate; paying 2.38 times book requires sustained high returns
• Dividend yield of 0.32% offers minimal income cushion
• Recent profit growth of 102% may be cyclical and difficult to sustain

AI Analysis

When I look at Eimco Elecon, I first ask what it owns and what it earns. At ₹1,665.75, the market capitalises it at ₹911 crore, 19.29 times trailing earnings. That is not a bargain in absolute terms, but with profit growing over 100% and sales nearly 38%, the PEG of 0.28 suggests the market is not paying for the recent pace. A 7/9 Piotroski score and debt/equity of 0.01 are exactly what I like to see: a company not reliant on leverage. Promoters hold 48.96%, so their interests are tied to ours. ROCE at 15.95% is respectable, though ROE of 11.49% tells me the balance sheet is conservatively capitalised and the plain-vanilla return on equity is not extraordinary. Book value is ₹700.41; paying 2.38 times book requires the business to keep compounding. The latest quarter's sales of ₹63 crore and net profit of ₹13 crore show momentum, but I am bothered by negative free cash flow despite reported profits. That forces me to inspect receivables, inventory and capital spending before trusting the earnings number. A 0.32% dividend yield offers little support if growth stumbles. The 52-week range of ₹1,405.50 to ₹2,380 shows the stock has already corrected; that is good discipline in the market, but not a margin of safety by itself. I would not call this a deep-value Graham stock. It is a fast-growing, financially sound industrial products business with a decent franchise. At the right price, it belongs on a watchlist. I would wait for either a lower price or a few more quarters of cash conversion to confirm the quality of earnings.

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