Embassy Off.REIT (EMBASSY)

FairStock Score: 34/100 — RISKY

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

Key Financials

Strengths

• Free cash flow of ₹1,444 Cr provides cash cushion for debt and potential distributions.
• Latest quarter net profit of ₹381 Cr on sales of ₹1,193 Cr implies a strong operating margin.
• Profit growth of 56.71% and sales growth of 16.82% show momentum.
• Piotroski F-Score of 7/9 suggests reasonable financial health.
• Five-year revenue CAGR of 10.93% shows long-term expansion in the asset base.

Concerns

• Dividend yield of only 0.15% is very poor for a REIT and gives no income support at this price.
• P/E of 102.67 and PEG of 2.79 make the valuation rich relative to growth.
• ROE of 5.19% and ROCE of 3.64% indicate weak returns on capital.
• Debt/equity of 0.96 combined with a P/B of 1.83 leaves little room for tenant or market stress.

AI Analysis

Let me begin with what I like: Embassy Off.REIT has generated ₹1,444 Cr of free cash flow, and the latest quarter net profit of ₹381 Cr on sales of ₹1,193 Cr is a healthy 32% margin. Sales are up 16.82% and profit jumped 56.71%, while the five-year revenue CAGR is 10.93%. Those are real numbers of a growing asset base. The Piotroski F-Score of 7/9 tells me the balance sheet is not in obvious distress. But I am not buying an index; I am buying a claim on future cash. And here the future cash is already being capitalized too optimistically. A P/E of 102.67, with a PEG of 2.79, says I am paying nearly three times the growth rate. For a REIT, that is especially dangerous because your return ultimately rests on rent collections, occupancy, and the ability to service debt. A dividend yield of just 0.15% provides no support, no bird in hand. Book value is ₹209.36; I am asked to pay ₹382.35, an 83% premium. That leaves no margin of safety. Return on equity is 5.19% and ROCE is 3.64%; a business that earns 5% on equity is not a compounding machine. With debt to equity of 0.96, leverage is meaningful, and if office demand softens, fixed obligations will bite. In Buffett terms, a good business is one with high returns on capital and pricing power. Embassy may own quality office parks, but the numbers show modest returns and a rich valuation. FCF is good, but not enough at this price. I would wait for either a lower price or evidence that distributable cash flow can grow into the multiple. In summary: a fast grower on paper, but not an obvious value.

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