Everest Kanto (EKC)

FairStock Score: 31/100 — RISKY

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

Key Financials

Strengths

• Low leverage with Debt/Equity of 0.15, giving balance-sheet stability
• Promoter holding of 67.39% aligns management interests with minority shareholders
• P/E of 10.67 and P/B of 1.80 are reasonable if the earnings recovery is sustainable
• Latest quarter shows healthy profit of ₹36 Cr on sales of ₹365 Cr, supporting a possible earnings turnaround
• Piotroski F-Score of 6/9 signals decent financial health with no major red flags

Concerns

• Sales growth is -0.52%, so the topline is stagnant despite the huge profit jump
• ROE of 9.85% and ROCE of 11.79% indicate modest capital efficiency, not a strong moat
• Profit growth of 108.99% with flat sales could be driven by one-offs or cyclical margin expansion, making the low P/E and PEG misleading
• Dividend yield of 0.62% means minimal cash return while waiting for value to materialize

AI Analysis

At ₹115.69, Everest Kanto is a ₹1,258 crore industrial-products business. A simple Buffett test: am I buying a decent business at a sensible price, or a mediocre business at a bargain? The balance sheet is clean—debt-to-equity is 0.15, and promoter holding of 67.39% aligns ownership with minority shareholders. Book value is ₹64.33, so I'm paying 1.8 times book. That is not a deep-value Graham bargain unless earnings power supports it. The P/E of 10.67 looks cheap, and the PEG of 0.10 looks absurdly cheap because profit growth shows 108.99%. But Graham warns me: past growth is not future growth, and one year's profit jump is not necessarily economic progress. Sales growth is -0.52%. You cannot create intrinsic value through cost-cutting alone forever. Latest quarter sales ₹365 Cr and profit ₹36 Cr is healthy, but if the profit surge is from cyclical upswing, margins, or non-operating factors, today's 'cheap' P/E could be an illusion. ROE of 9.85% and ROCE of 11.79% are moderate; this is not a franchise with pricing power. The Piotroski score of 6/9 says the financial position is okay, but not exceptional. Dividend yield 0.62% means I am not being paid much to wait. I need a moat. With flat sales and modest returns, I don't see a wide one. This looks like an industrial cyclical perhaps emerging from a bad patch. I will not pay a premium; I want a lower price or evidence of durable revenue growth. If the company can convert this profit recovery into consistent sales growth and higher ROE, the current multiple may look fair in hindsight. Until then, it goes on my watchlist, not into my wallet.

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